"There's been some improvement in pricing recently, particularly in the longer-tail commercial lines, like workers' compensation, and in commercial property," Colannino said. "Rates have come down so far, they still have a long way to go, but this is better than what we've seen in the past several years."
One big factor behind the firming prices is the current low interest rate environment.
"Companies have to be profitable on the underwriting side, because investment income is down," Colannino said.
Other factors include the string of natural catastrophes that have plagued the United States so far this year, plus reserves have started to show unfavorable development, he said.
"We expect to see reserve charges increase for companies going forward, and companies aren't going to benefit from the redundancies as they have for the past several years," he said.
After removing the effects of asbestos and environmental and discounting, A.M. Best estimated that the reserves carried by the U.S. property/casualty industry (including personal lines) were slightly redundant by $1.9 billion at year-end 2009.
"Now we believe reserves are slightly deficient," Colannino said. "We think we've crossed that line."
Industry leaders aren't all in agreement that the market is hardening, but rates continue to be a major source of discussion. XL Group plc's Chief
Executive Officer Mike McGavick said the market isn't hard yet, but rates have begun to firm.
About 90% of chief financial officers of insurance companies with more than $1 billion in written premium say the property market is hardening or beginning to harden, according to a Towers Watson survey.
The casualty market that is still softening, but shows signs of turning around within two years, the CFOs surveyed said. About 87% of CFOs surveyed said they believe the casualty market is soft, softening or at the bottom of the cycle.
CNA Financial Corp. Chairman and CEO Thomas F. Motamed said rates were slightly positive in specialty for the second quarter in a row, and commercial rates continued their climb for the fourth consecutive quarter. William R. Berkley, chairman and CEO of W. R. Berkley Corp., said it was the company's third quarter in a row of increasing rates.
Alexander S. Moczarski, president and CEO of Guy Carpenter, MMC's reinsurance brokerage, said rates vary by geography and catastrophe zone.
"We've seen in the U.S. and Canada probably cat is somewhere up between 5% and 10%. Obviously, in Japan, [there's been] some major increases on the cat side," Moczarski said.