BROOKLYN, N.Y.—A hard-pricing insurance market may not be arriving anytime soon, an analyst said at a conference earlier this week.

Jay Cohen, a managing director in the equity research division of Bank of America-Merrill Lynch, gave his assessment during a session of the Standard & Poor’s Insurance 2009 in Brooklyn.

In spite of asset losses and catastrophe insurance losses, property-casualty insurers have not felt the kind of pain that fuels a hard market, Mr. Cohen advised.

 “When I talk to [insurance company] management [teams], they talk about the oncoming hard market,” saying things like, “We’re well-positioned. We’ve got capital. We’re excited about prices going up over the next year,” he said.

“Usually, you don’t see a turn in the market if everyone’s so excited about it,” Mr. Cohen said. You see a turn when managements are saying, “We’ve got a lot of losses,” or, “Our balance sheet is significantly impaired [and] we’ve got to pull back quite a lot,” he said.

That’s when insurance prices will really start to go up dramatically. “We don’t have that kind of pain yet” in the form of higher loss and combined ratios.

Mr. Cohen said that for the companies he follows, the average combined ratio was 88 for the first quarter, or 93 on an accident-year basis. “That’s not so bad,” he said.

He also noted that price declines are beginning to slow, attributing the change in part to the investment losses insurers have experienced and lower interest rates.

“That’s a good thing. It didn’t take 120 combined ratios for that to happen,” he said.

W. Marston Becker, chair and chief executive officer of Max Capital Group, speaking at a later session, said, “You have to give the industry credit [because] a year ago, you were reading about nothing but rate declines in casualty business.”

Today, there are reports that some prices are flat, some down, and while there are still no significant rate hikes outside of those for professional liability coverage for financial institutions, the moderation in price declines is happening “before the industry hit the rocks,” Mr. Becker said.

”Never before have we had any meaningful inflection in rate without severe combined ratios,” he said.

“There may be something to” assertions that there’s better pricing monitoring and better risk management going on in the industry today, he said, adding that “the industry perhaps is trying to take out the peaks and valleys of the cycle.”

The soft-hard cycle has not been eliminated, “but perhaps you don’t have the low lows, before you have the high highs” in pricing, Mr. Becker said, noting that this is a better situation both for clients and insurers.

Mr. Cohen also said he expects more price stabilization going forward, and noted that companies are now routinely monitoring pricing by agent, by region, and by product—a clear difference from the 1990s when they had no price monitoring tools at all.

“They have better data and they’re looking at the data,” he said, adding that he believes that they are demonstrating the discipline to translate the data into action.

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