NU Online News Service, Jan. 28, 10:56 a.m.EST

This year's insurance market prices should remain stable, asthey were in 2009, despite a belief that during the first half ahard market turn was on the way, Marsh brokerage said.

Those findings were in a market report the firm releasedyesterday titled, "Competition Nets Rewards, U.S. Insurance Market2010, It's About Your Risk,"

Marsh said the insurance market in 2009 reflected intensecompetition among insures, increased capacity and fewer insuredcatastrophe losses and is poised to do it again in 2010.

A few lines, such as directors and officers insurance forfinancial services, bucked the soft market trend, but generally theinsurance market avoided the hard market predictions of earlier inthe year.

Insurers understood customer willingness to market theiraccounts, Marsh said, and brokers were able to use that fear oflosing accounts to get better prices for a client's risk or termsand conditions.

Commercial property insurance in the United States is expectedto remain stable, provided there is not a major catastrophe, thereport said.

Soft market and stable conditions are also expected to remainfor other lines of business for the coming year, Marsh added.

During a Web seminar discussing the insurance marketplace, JoeMcSweeny, president of Marsh's U.S. and Canada divisions said thatthe major challenge for insurers this year will be maintainingprofitable business as the old earnings model has proven itself notto be that reliable.

"This recession has made it clear that investment earningscannot be viewed as a consistently reliable source of significantearnings that insurers traditionally [expect] them to be," said Mr.McSweeny.

"That means they will be motivated to work hard to achieveunderwriting profitability and risk appropriate rates. This will bethe biggest challenge for insurers in my opinion, in 2010 as broadbased hardening of rates is not expected in the near term," headvised.

Steve Weisbart III, chief economist for the InsuranceInformation Institute, also a participant in the seminar, said theindustry's results, while an improvement over 2008, were notnecessarily the result of good management but a light catastropheloss year with better improved earnings.

"Those outcomes cannot be expected to continue," he said.

There will be pressure on insurers to achieve underwritingprofitability, and a hard market will come, it's just a question ofwhen, he explained.

During this soft market period, policyholders should look tofind ways to reduce their risk profile and put themselves in anadvantageous position when the hard market finally does arrive, Mr.Weisbart said.

Concerns that insurers would be forced to position themselveswith more expense over regulatory issues seems to be subsiding, henoted, but there continues to be pressure for the United States tospeak with one voice when it comes to dealing with internationalregulatory issues.

It would be advantageous for the United States to develop asingle, internationally recognized accounting standard, when itcomes to insurance, thereby making it easier for investors tounderstand their business compared to other businesses, advised Mr.Weisbart.

On one hand, the easier comparisons could make more investorswilling to invest in the industry or allow insurers to meetstricter capital requirements regulators might impose, hesuggested. However, some critics fear one standard could makeinsurers financial reporting more volatile and make capital "lesswilling to go to insurance. And that would be a terrible outcome,"Mr. Weisbart said.

Copies of Marsh's report are online at www.marsh.com.