NEW YORK (Reuters) ? Property and casualty carriers could be headed for another ?boom and bust? cycle, even as they report record profits, a leading company and an industry adviser both warned yesterday.

?I could make a strong case that we are standing on the edge of a cliff,? said Lloyd?s of London?s Director Julian James at an insurance conference yesterday, citing pricing pressure and a slowing economy.

Similarly, Advisen Ltd., which provides research to insurers, warned that the industry is already in a buyer?s market and having ?a profitable year will encourage insurers to further cut prices?.

That message may already be in the marketplace. Since mid-October, the Standard & Poor?s index of property and casualty insurers has declined 1.8 percent, even though insurers, with no hurricane losses in the third quarter, have been reporting record profits.

Chubb Corp.?s quarterly earnings doubled from year-earlier levels, but its stock has dropped to $52.77 Monday from its year-high of $54.73 on October 24.

Lloyd?s James, who represents the world?s fifth largest insurer, said that while the industry is on track to have a great 2006, the industry?s long-term performance is ?not pretty?.

Insurers are seeing ?weak? premium growth and rates are creeping downward in non-catastrophe-prone areas, James said. Because of current profits and surpluses, states are reluctant to allow insurers to raise rates.

And the forecast for a sluggish US economy, with declining housing starts, will slow demand for auto, home and commercial insurance, he said.

Advisen?s study showed that commercial insurance premiums fell slightly during the third quarter, representing a continuation of a year-long trend.

Property insurance was the only line of business to show increases, but that was due to sharp hikes in areas exposed to hurricanes and earthquakes.

For policyholders outside those regions, premiums fell, Advisen said.

?Unless you own property on the coast or along a fault line, it?s increasingly a buyer?s market,? said David Bradford, editor in chief at Advisen.

Premiums for directors? and officers? insurance, which covers company executives and board members, fell by a small margin in the quarter, despite the widening scandal over stock options that has engulfed more than 100 companies, and competition for business remains ?intense,? Advisen said.

Workers? compensation premiums dropped by nearly 3.4 percent, reflecting the impact of reforms in California and Florida.