For insurers, it could be the perfect storm of bad news : how to deal with declining rates when the cost of everything else, from oil to food to labor, is going up.

Past underwriting cycles have turned on any number of events in the past -- liability crises, terrorist events, devastating hurricanes -- but never before has inflation been the trigger to stem market softening, noted Robert Hartwig, president of the Insurance Information Institute.

"Inflation tends to be amplified in the insurance system," Hartwig said. "If you look at the sorts of services property/casualty insurers typically provide -- such as medical services for people injured in auto accidents or injured workers in the case of workers' compensation -- those costs tend to move directionally with overall inflation, but at a much quicker pace."

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