Could the soft market finally be over? A new analysis concludes that insurance prices are rising and the prolonged soft market is ending, contrary to earlier reports from other analysts.

Virginia-based SNL Financial says personal lines pricing is definitely hardening and commercial lines is moving in that direction such that premium increases can be expected in the coming quarters.

U.S. property/casualty industry premiums in the fourth quarter grew at their fastest rate since 2006 in response to underwriting losses, unfavorable reserve development and an improving economy, Jon Wright, SNL Financial’s director of insurance, said in an interview with Insurance Journal.

This means buyers could see higher premiums as 2011 continues, particularly in personal auto and homeowners insurance, said Wright.

The commercial lines segment is also coming out of its pricing slump, according to the SNL analyst.

“For commercial lines, what we’re seeing is we’re still seeing declines in premiums year-over-year, but what we’re looking at is a point and a half whereas a year ago we might have been seeing nine, 10 percent decline year-over-year. What we’re seeing is moving along that curve to where we should see flat to increases over the next several quarters,” Wright said.

After analyzing data for 95 percent of the industry, SNL Financial found that the U.S. insurance industry’s negative returns on underwriting continue to deepen and the short-term boost from over-reserving for prior years is running out.

Wright said 2010 saw overall premium growth, a trend that SNL analysts expect to continue in 2011. Direct premiums written increased 2.9 percent and net premiums increased 4.0 percent from the fourth quarter in 2009, according to the SNL report.

Underwriting losses totaled $2.4 billion, of which $750 million came from additions to reserves for prior years.

The SNL view that the market has turned appears to contradict other recent reports that have concluded the soft market is not yet over and won’t be for some time.

Average renewal premiums for commercial lines were largely unchanged during the fourth quarter of 2010 and that may remain the case for a while, according to the RIMS Benchmark Survey, which was administered by Advisen. That risk managers’ report, issued the first week of February, cautioned that a turn in the market is not imminent.

The RIMS/Advisen conclusion was consistent with a report from insurance broker Marsh released about a week earlier. It said that soft commercial  market conditions that persisted throughout the U.S. in 2010 would continue into 2011. Intense competition among insurers, abundant capacity, and relatively few insured catastrophe losses continued through 2010 and are forming the market conditions for 2011, the Marsh report said.

SNL Financial believes it came to a different conclusion because its data is better. It said it analyzes financial information from 2,500 property/casualty insurers. “We’re not just looking at broker-based business; we’re looking at everyone,” said Wright.

In terms of what’s ahead, Wright said he expects the first quarter will show the hardening trend continuing.

“I think we’re going to see continuance of deterioration of underwriting losses, fewer reserves released, continuance of low investment yields. And so, each of those three things are pointing towards a hardening market and a continuance of that,” he told Insurance Journal.