Premiums in the commercial insurance industry continued along the path of an 18-month long down market, according to the Risk and Insurance Management Society, Inc. (RIMS) Benchmark Survey released yesterday.

The study of current policy renewal prices, which is based on insurance schedule data from corporate risk managers, found a contradictory message with renewal prices stabilising or even slightly increasing for some lines of business and other leading indicators of market direction signalling further declines.

General liability, which is a line that is usually responsive to changing market conditions, showed clear signs of firming, while property, often a leading indicator of market conditions, fell a further 4.3 percent in the latest quarter according to Advisen Ltd., the firm which collects and analyses the data.

?It seems like a market in search of a reason to move in one direction or another,? said Karen Beier, member, RIMS Board of Directors, Membership and Chapter Services portfolio.

?Indications are that the market is near its bottom and waiting for a catalyst to nudge it in the other direction, but it is still unknown what that catalyst will be.?

The surveyors also found other seemingly contradictory indicators that demonstrate the unsettled nature of the first soft market since 1998.

While directors and officers liability insurance was among the highest-flyers in the most recent hard market, it has recently suffered some of the steepest premium declines of any major line.

Prices also continued to decline this quarter, but anecdotal information indicates that larger insureds are experiencing stable-to-increasing premiums, according to the survey.

Larger, macro-economic conditions also demonstrate the contradictory nature of the market.

The property and casualty industry continued to enjoy strong financial returns, which typically indicates heightened competition and falling rates, however, other factors suggests that prices may be on the verge of strengthening.

?Rates fell sharply across most lines through the last quarters of 2004, but those decreases are only now being reflected in earned premium,? explained David Bradford, editor-in-chief at Advisen.

?As the effect of reduced prices hits the financials of insurance companies, and without strong investment income and capital gains to offset underwriting losses, we can expect to see prices turn upward again.?

Further loss reserve increases, earnings adjustments following the reassessment of finite reinsurance transactions, and continuing losses from natural disasters could impact earnings and erode capacity, placing further upward pressure on premium levels, he said.

?This could be a lull before another round of price declines, or, more likely, it could be the last gasp of a shallow and relatively short-lived soft market,? Mr. Bradford continued adding that only time will tell.