DALLAS — A 100% combined ratio isn't what it used to be for property/casualty insurers, the president of the Insurance Information Institute Inc. said last week.

That's because interest rates have dropped to lows not seen in decades, thus placing more emphasis on underwriting discipline, III President Robert P. Hartwig said during the sixth annual Entrepreneurial Insurance Symposium in Dallas.

Dallas-based electronic insurance exchange MarketScout established the symposium in 2007 as a means to profile innovation in the insurance industry.

Mr. Hartwig said no current insurance management team in the world has ever operated in an environment where interest rates are as low as they are now. Not only are interest rates low, they will remain so, he said, forcing insurers to make up for investment income through underwriting and pricing discipline.

That's particularly true for workers compensation, Mr. Hartwig said. Workers comp “needs to turn hard and needs to remain hard,” he said.

“We saw comp premiums written fall off a cliff” in 2006 due in part to a soft market, he said. Now the workers comp exposure is higher than it was before the plunge, he said.

For property/casualty insurance in general, pricing is “all moving in a positive direction,” said Mr. Hartwig.

In addition, tort costs have leveled off. “The tort reforms of the prior decade have had a positive effect” and helped make the United States more competitive in the global marketplace, he said.

Looking ahead, Mr. Hartwig said industries that will need insurance solutions in the next 10 years include health care, health sciences and energy, both traditional and alternative.

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For the economy in general, “things aren't as much of a disaster in the United States as we might think,” Mr. Hartwig said. Consumer sentiment is up, and there has been a “dramatic” reduction in business bankruptcy filings. However, during a question-and-answer period after his presentation, Mr. Hartwig said that consumers are mending their household balance sheets, and that it will probably be the middle of the decade before people feel better. “That's a lost decade,” he said.

The best way to reduce government debt is for the economy to grow while spending holds steady, he said. But holding the line in spending is “one of the tests for any administration,” he said.

Mr. Hartwig also discussed the relationship of presidential politics and the property/casualty insurance industry's return on equity, and whether the industry fares better under Democratic or Republican presidents.

The president's party affiliation has “marginal bearing on the profitability” of the property/casualty industry, he said. “Hurricanes and earthquakes don't care who is in the Oval Office.”