This year is “the first year since 2005 where economic perceptions and reality in the US will be positive”, according to Insurance Information Institute President Robert Hartwig.

Speaking at a conference in Chicago, he listed four criteria that must be met in order for the US market to harden: a sustained period of large underwriting losses; a material decline in surplus/capacity; a tight reinsurance market and renewed underwriting and pricing discipline.

He said 2011 “rewrote” global catastrophe loss and insurance history, with a new record of $US380 billion ($364.6 billion) in global economic losses, $US72.8 billion ($69.8 billion) of which was in the US.

Dr Hartwig listed four criteria that must be met in order for the US market to harden: a sustained period of large underwriting losses; a material decline in surplus/capacity; a tight reinsurance market and renewed underwriting and pricing discipline.

“Most excess reinsurance capacity was removed from the market in 2011, but there does not appear to be a shortage, leading to modest increases in 2012 reinsurance renewals except in areas hit hard by catastrophes.”

He says US insurers have not yet adapted to a persistently low interest rate environment, with investment income likely to weaken in 2012 after a “surprisingly strong” performance in 2011.