US insurance leader Bill Berkley says the country’s economy faces “volatile” and “uncertain times” and commercial lines products are continuing to lose money.

Mr Berkley, whose company operates as an insurer and reinsurer in Australia, says US commercial lines are no longer profitable.

He told insuranceNEWS.com.au the cycle “must turn soon”.

Speaking to a US business conference recently, he said profitability in the US insurance industry peaked in 2006 with a combined ratio of around 86%. Since then commercial lines pricing has fallen by more than 15%.

He says this present insurance cycle needs to change as US insurers have been using a limited pool of money to cope with the economic downturn.

Insurers have a limited amount of reserves, “and they have been using them for several years to the tune of close to $US50 billion ($50.6 billion),” he told insuranceNEWS.com.au.

Mr Berkley says excess and surplus lines price in the US are being hit hard, dropping by 30%.

“We believe the real accident year combined ratio for the current year will be somewhere between 110-115,” he said.

Investment returns have also dropped by 200 basis points and in a bid to offset this decline, companies will need to have at least five or six points of additional underwriting profit.

“When we look at the current profitability on an accident year basis, we believe the industry as a whole, is losing money.”

Mr Berkley says his company usually sits 8-10 points higher than the industry average but has also been feeling the pinch in recent years.

“Either our underwriting has gotten worse or much of the industry is reporting optimistic numbers on an accident year basis,” he said.

But he believes the market “is in the process of correcting itself”.

“We are also optimistic that in this complex world of information overload, our industry will not continue to make the same mistakes we have in the past.”