Veteran insurers who have weathered any numbers of ups and downs were this week hopeful that the cyclical volatility of the insurance industry could be tamed, or even stayed.

The sector historically has gone through cycle after cycle of price spikes and drops with the two phases of the market having become known as ?hard? (when demand is high and supply is low, and prices are high) or ?soft? (when prices drop as supply increases).

Most recently, insurers have been operating in a ?hard? market but now see the tides turning again as capacity grows accompanied by rates, across most lines, either flattening out or falling off.

But hopes of less volatility and greater stability was clearly on the mind of five leading executives taking part in a panel discussion on Wednesday that was part of the World Insurance Forum.

The subject of stopping, or at least calming the vicious pricing swings that have historically followed the industry, was something that was front and centre during much of the two-hour discussion.

Michael Butt, chairman of AXIS Capital Holdings, and moderator of the discussion, said the subject of whether the shape of the cycle had changed was something being frequently raised. And the executives seemed to agree that the wide fluctuations between the hard and soft phases of the market could be tamed, but said it was up to company CEOs to lead the way.

Allied World Assurance Company (AWAC) vice-chairman Michael Morrison, who was also CEO until earlier this year, said: ?The cycles come and go,? but said he believed the industry could maintain hard market conditions if it held on to underwriting discipline or refused to write business at rates that could prove unprofitable, something that has happened in previous soft markets and led to numerous companies? financial woes and even demise.

He added that the industry was made up of ?three legs; the insurers and reinsurers, the brokers and the buyers?, and that they all had to be part of moderating the cyclical nature of the industry.

Speaking of a report from Fitch, Mr. Morrison said the finding was that the underwriting business, in aggregate, had not made a profit since 1978.

With a touch of irony in his voice, he said to the group: ?I thought we were in the underwriting business.?

Mr. Morrison said that buyers bemoan the fact of price fluctuations, but their cries are louder on the way up than down.

?Basically it is price driven,? he said, but added that there could be hope as in a recent survey done by the Risk and Insurance Management Society (RIMS) of its membership base of more than 8,000 risk managers, buyers said that the pricing of coverage was not their biggest concern, but rather the financial security of the company.

Mr. Morrison rhetorically said: ?Can the cycle be broken? Yes. I believe it can.? But he said that could only be achieved if the heads of companies took full responsibility for the running of their companies, and ran them well.

?CEOs; nobody else, not management which is an amorphous term. It is the CEO setting a realistic top line and watch the bottom line.? He added that middle management should be confident in the CEOs guidance and should also have the ability to walk away from business if prices fall to unprofitable levels.

?CEOs must set the mood and should be personally responsible,? he said, and called on buyers to play their part by not going for the lowest prices but being willing to pay for coverage at a constant level. And brokers should also be advising buyers along these lines,? Mr. Morrison said.

Mr. Butt said: ?Somehow we have to stop satisfactory underperformance being acceptable in our industry. It comes back to the determination of CEOs and the determination that cycles will be flatter.?

John Coomber, CEO of Swiss Re, said in the past, the view was to get the assets in and see what returns could be made, but it was difficult to do in the current interest rate environment. But he countered that it should now be possible to stabilise underwriting returns as companies could now more accurately assess risk levels with the development of more advanced assessment tools.

However, he said he agreed with Mr. Morrison that leadership was important.

?Sometimes public hangings send a message, but let?s hope we can avoid these kinds of things.?

XL president and CEO Brian O?Hara said he too was hopeful that underwriting discipline would be maintained.

?Growth is not necessarily a good thing at all times. Underwriting discipline must be primary. If we could stick to that, the cycles would not go away, but would be more moderate.

He said that the industry had come through a period of transformation, and getting ?back in balance? and hoped that stability would continue.

?We are more in an equilibrium state, I think and the elements call for moderate behaviour and the near term looks rather stable,? he said.

CEO of leading broking firm Willis, Joe Plumeri, said: ?I have been doing this for a short period of time,? he said, adding, with irony in his voice, that when he came into the business he was puzzled by loss ratios.

?I thought you were supposed to spend less than you made. That is the only thing I understood,? he said.

Being on the broking side, Mr. Plumeri said they simply tried to do the best they could for clients, and did not feel they were driving ?prices up and down by 30 percent?.

He added that he hoped insurers would steer a solvent course, as his business depended on their being strong companies to place business with.

?I don?t know about cycles but I think about insolvency I think about the worst that could happen is consolidation. There would be no place to go.?

In addition to strict underwriting controls, the panel said more rigid accounting regulations and more stringent corporate governance standards could also be a moderating influence on the industry?s cycles.

Mr. Morrison said that Sarbanes-Oxley legislation ? which put strict corporate governance standards on all US-listed companies after a wave of high-profile scandals with such corporations as Enron and WorldCom resulted in investors losing millions ? might well mitigate the highs and lows that have historically been a part of the insurance cycle.

?I hope and believe that will have a significantly positive influence in the industry,? he said.

This was a view shared by other insurance executives taking part in subsequent WIF sessions.

As an example, one executive said the change could already be seen in the solid results posted by the reinsurers that set up after 9/11.

In years past he said the tendency would have been to work with the numbers and to tuck some of the profit away as a ?cushion? for when times were not so good.

But now, he said stricter corporate governance and accounting regulations were dictating that everything be revealed.

At least one WIF speaker felt however that the cyclical nature of the industry would continue.

The keynote speaker at WIF on Tuesday, John Sinnott, a senior advisor for leading broker Marsh & McLennan Companies Inc., and former CEO and chairman of Marsh Inc., predicted insurance cycles would continue.

Mr. Sinnott, said business had changed ?immensely? since he started with the company in 1963 but predicted the pricing ups and downs witnessed through the years, would continue.

Mr. Sinnott said there had been predictions made any number of times through the years that the cyclical nature of underwriting would go away, but concluded they had never panned out.

Mr. Sinnott shared a chart with the audience that showed how the business had gone through the ups and downs of cycles ? a graph borrowed from an actuary that chronicled market peaks and valleys since 1956, and tracking pricing on an adequacy scale, showing levels falling as much as 20 percent below adequate through the years. And pencilled in after a pricing peak in 2002, was Mr. Sinnott?s penned in 2003 followed by and a downward arrow.

Mr. Sinnott said the decline now being seen followed the cyclical nature of insurance and predicted there would continue to be a rise and fall as ?risk is dynamic, it is not static?.