The economy is recovering, but not enough to overcome a persistent soft market and spark robust premium growth, a new report from Advisen Ltd. says.

As a result, property/casualty insurers will increasingly view acquisitions and expansion into emerging markets such as China, India and Brazil as attractive avenues for profitable growth, according to the report, which was sponsored by Zurich.

“The Great Recession caused a decrease in commercial lines premium volume as companies downsized or went out of business,” said David Bradford, Advisen executive vice president and the author of the report. “Written premiums are beginning to grow again as the economy improves, but the growth is partially offset by rates that stubbornly continue to trend downward. Acquisitions and international expansion represent opportunities for growth that insurers increasingly will pursue in 2011 and 2012.”

A hard market would contribute to organic growth, but the commercial lines insurance market remains mired in the soft phase of the pricing cycle. Billions of dollars of insured losses from floods in Australia, an earthquake in New Zealand and an earthquake and tsunami in Japan have been insufficient to absorb the excess capacity in the global insurance market and trigger a turn in pricing, according to Advisen.

“No leading indicators are signaling imminently higher rates, but a number of factors are beginning to converge that could set the stage for a firmer market,” said Bradford. “These include lower investment income, depleted loss reserves, and the potential impact of additional catastrophe losses on top of the very large first quarter losses. The market may bottom out and begin to firm a bit by 2012, but sharply higher premiums as seen in 2001 to 2003 are unlikely.”