For the first time in 10 years, the U.S. health insurance industry is expected to report a decline in medical expenses, according to a new report by Weiss Ratings.

Weiss, an independent provider of insurance company ratings, based its findings on a study of 852 health insurers.

The study showed that medical costs fell 1.6 percent in the first nine months of 2010.

For all of 2010, Weiss estimates that insurers’ medical expenses,will fall 3 percent, less ‘reinsurance costs’ bought by health insurers to limit risk.

“This is a critical change from the steady and rapid increases of prior years,” said Gavin Magor, senior insurance analyst for Weiss. “If it continues in 2011, it should help boost health insurer profits while also pressuring them to curb premium increases and give consumers some much-needed relief.”

Insurers have been increasing premiums 6 to 8 percent a year, citing  annual double-digit increases in cost of medical care.

Some insurers, such as Blue Cross of California, have recently threatened their customers with premium hikes of as much as 59 percent.

The Weiss report “is a significant finding and it’s hard to pinpoint the reasons for this change in trend at this point,” said Magor.

Though total enrollment in health insurance declined slightly in 2010, Magnor said that down tick was not large enough to push medical costs lower.

However, Michael McRaith, director of Illinois Department of Insurance, says that while medical costs are rising, insurers may have taken steps to offset the increases.

“It may be that as health care costs become increasingly expensive, insurers are more aggressively excluding people from coverage, denying payment of claims or more aggressively pricing coverage so that fewer people can afford to pay premiums,” McRaith said.

“Any one of those reasons could explain why insurers are paying less or flat amounts on medical expenses at the same time that some publicly-traded insurers are reporting massive profits to shareholders,” he said.

The report showed that among the companies that reported a decline in medical costs, Aetna’s medical expenses fell by 14.1 percent in the first nine months of 2010 from a year earlier.

Keystone Health Plan West’s medical costs also fell by 11.1 percent in that period.

However, that decline wasn’t felt across the board. Group Health’s medical costs rose more than 16 percent while Blue Cross of Idaho saw a 12.9 percent increase in medical expenses.

Weiss’ study was based on mandatory data on medical expenses that health insurers provide to the National Association of Insurance Commissioners.

America’s Health Insurance Plan, the trade group of health insurers, was not immediately available to comment on the report.