There are no signs that the personal lines market should beexperiencing dramatic upward pressure, and could be moderatingthanks to increased premiums and light catastrophe season so farthis year.

The latest indicator is MarketScout's barometer for July thatshows personal lines rates edging down to plus 3 percent after twoconsecutive months at plus 4 percent.

Compared to 2012, catastrophe losses have thus far been lighter.A.M. Best recently reported P&C insurers' combined ratio dropped 2.7 points inthe first quarter of this year to 94.7 as catastrophes accountedfor 2 points of the combined ratio in 2013 compared to 3.2 pointsin 2012.

The combination of higher rates and light catastrophe losses hasdriven the positive second-quarter results for such insurers asSelective Insurance Group, State Auto Financial Corp. and Hanover Insurance Group.

“Generally speaking, personal lines insurers are having apretty good 2013,” says MarketScout CEO Richard Kerr.

However, Kerr warned that hurricane season is upon us—and thereis the continued threat of earthquakes or brush fires in the West,so the possibility of catastrophic events still looms on thehorizon. Should there be no major catastrophes this year, Kerrbelieves this could be a good year for personal lines carriers andrates “will adjust downward a bit.”

Insurance Information Institute Senior Vice President and ChiefEconomist, Steven N. Weisbart, says for personal lines insurers, itstill remains a struggle to keep rates profitable. For propertylines, if the remainder of 2013 turns out to be a low catastropheyear, then carriers will deem rates adequate. However, a majorcatastrophe could change that direction.

On the casualty side, Weisbart says the cost of health care willbe the major determining factor. Those rates appear to bemoderating and that would translate to the benefit of carriers.

Over the long term, inflation is remaining moderate and notputting pressure on rates, he says. The auto line is one area inwhich premiums are increasing, but that has more to do with peoplebuying newer model cars and thereby increasing exposure. Overall,carriers' books are healthy and they appear positioned to easilyhandle catastrophic losses.

“Right now, because [insurers'] surplus is in such good shape, Iwould say the likelihood of a hard market is fairly low,” saysWeisbart.

Through June of this year, MarketScout says personal lines rateshave hovered around plus-4 percent for four out of the past sixmonths, dipping to plus-3 percent in April and February.

In July, Homeowners coverage of over $1 million in value dropped1 point from June to plus 3 percent while Homeowners coverage under$1 million in value remained unchanged at plus 4 percent.Automobile and Personal Article also moderated by 1 point to plus 3percent and plus 1 percent, respectively.