In 1999 private motor rates picked themselves off the floor. This year should see the end of bargain basement prices for commercial insurance buyers irrespective of the cover sought.

Industry leaders are forecasting hikes of up to 15% as underwriters and their reinsurers seek to return the sector to profitability – even at the expense of market share.

This year will also see the emergence of the internet as a major distribution channel for selling commercial packages aimed at small businesses.

Norwich Union (NU) markets manager Colin Harper anticipates rates hardening by at least five per cent this year for the majority of policyholders. However, those with a poor claims history or who fail to appreciate risk management can probably expect increases of between 15% and 20%.

The Underwriter chairman Robert McCracken said minimum increases of ten per cent were more likely.

"The reinsurers have had enough in terms of losses and want to see a move. We have also had enough and rates need to go up. This will begin to bite in the March/April renewals," he said.

CGU managing director Cees Schrauwers was equally bullish about increases. "I'd expect ten per cent and more, particularly in the liability area. The legislation currently being enacted is going to be very costly.

"If Ogden moves from three to two per cent that will represent a 50% increase in the cost so liability rates will increase by 15% or more."

The London Market is in a more difficult position he said, with a rate move of 20% to 25% to retain profitability."

Chartwell Underwriting's Roy Figg said liability renewals had been hardening since last September. "I would suggest we are achieving about 15%, although on the best performing cases we are renewing at expiring terms," he said. But, he added a note of caution.

"To suggest that the market will turn around in 2000 is somewhat presumptuous. Although we feel the trends are there, as shown by our renewal increases, it does not take much for someone to buck the trends."

Industry leaders also expect the internet to become a force in the market.

"The internet will have most impact on the smaller end of the market such as shops and offices," said NU's Harper.

"We are all looking to the skies as we compete to see what will be the best way of trading into the future," he said.

The Underwriter's McCracken agrees. While he has no plans to establish an on-line selling presence, he said the larger composites were almost certainly planning such a move.

CGU's Schrauwers was reluctant to be drawn. "You have to assume that we are very active," he said.