The property and casualty insurance industry continues its frustrating wait for the much predicted, yet elusive, hard market to materialize. Two recent surveys by industry groups indicate that this wait may last just a little bit longer.
IN PICTURES: Digging Out Of Debt In 8 Steps

Surveying the Market
The first survey was from the Council of Insurance Agents & Brokers, which conducts a quarterly survey on the property and casualty market. In the third quarter of 2009, the average rate decline was 5.8%, compared to 4.9% in the second quarter. While a 0.9% difference may not seem significant, it marks the reversal of a moderating trend of rate declines. (For a primer on insurance, see our Intro To Insurance Tutorial.)

Just one year ago, in the third quarter of 2008, the average rate decline was 11%. Even worse for the publicly traded insurers is that the rate decline in the third quarter of 2009 was more pronounced in the larger accounts, at an average of 7.4%.

Seconding the Motion
The second survey was from MarketScout, which reported the composite rate decline for property and casualty coverage in October, 2009 was 5%, compared to 4% in September, 2009. The rate decline has been moderating each month since December, 2007, when a 16% decline was reported.

While the break in moderation is discouraging, it is not definitive, and may just be an anomaly. More data in coming months will provide more evidence of rate direction and strength.

Selective Hardening
Company commentary during third quarter earnings season seems to provide anecdotal confirmation of these surveys. XL Capital Ltd. (NYSE:XL) called the market environment "challenging" and although some insurance lines are experiencing "selective hardening," this is usually offset by lower exposure.

AXIS Capital Holdings Limited (NYSE:AXS) is also unsatisfied with the current market. John Charman, the CEO of Axis Capital Holdings Limited noted that rate change had been trending positive but recently stalled in several of its lines. "I have said for some time now the market cannot continue to erode primary pricing in the way it is. As a general comment, large accounts remain the most competitive across the board," said Charman.

Old Republic International (NYSE:ORI) said that competition in its general insurance business was "fierce" during the third quarter, with several competitors "hell bent on gaining market share."

This reference to price cutters usually refers to American International Group (NYSE:AIG), with many of its competitors accusing the company of using the cushion of government bailout money to gain business by cutting prices. American International Group has denied these charges.

The Bottom Line
The latest rate surveys from two property and casualty insurance industry organizations indicate that the rate decline moderation over the last few years has reversed. This may have dashed the hopes of patient investors in this group.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!