A property and casualty insurance trade group has continued the verbal battle between the insurance industry and consumer advocates by accusing Ralph Nader and the National Insurance Consumer Organization of misleading the public with erroneous data about the industry's financial condition.

The Insurance Information Institute said that Nader and NICO exaggerated the industry's profits last week and unfairly accused the industry of "price-gouging" and defrauding the public by claiming it had been forced to raise premiums after dramatic losses.

"Some of the numbers generated by NICO were so novel as to require some research to figure out how they were derived," Marc H. Rosenberg, a vice president of the Insurance Information Institute, said in a statement.

Nader and NICO argued at a press conference on Jan. 6 that the insurance industry's 1985 operating losses of $5.5 billion reported in December were "fraudulent" because they did not include $6.5 billion from the increased value of its investments and $3.5 billion in federal tax credits.

At the crux of the debate is whether the insurance industry should count unrealized capital gains and dividends as income. In addition, the two groups clashed last week over how much the insurance industry actually received last year in federal tax credits.

After this debate, the insurers now say that the industry earned an estimated after-tax profit of $1.7 billion last year, while NICO has revised its estimates to say that the industry made $5 billion.

"Even the property and casualty insurance industry now admits they did make money," said Jay Angoff, counsel to NICO. "We're just arguing about how much they made."

Insurers said Nader's $6.5 billion investment income figure was misleading because it includes unrealized capital gains, which the industry argues should not be included as income.

"Unrealized capital gains represent increases in the market value of securities which have not been sold," said Sean Mooney, senior vice president and economist of the III. "Hence they are not included in profit-and-loss data."

NICO countered in a press release yesterday that unrealized capital gains should be included as income "since an insurance company decides whether to realize capital gains based primarily on tax considerations."

The second clash came over NICO's accusation that the industry is improperly including in its losses dividends of $2.1 billion paid out to policyholders.

"NICO does not include dividends as losses because they are voluntarily distributed to policyholders by profitable corporations," said J. Robert Hunter, president of NICO and former federal insurance adminstrator in the Carter and Ford administrations.

But the insurance industry trade group contends that, under general accounting principles and Internal Revenue Service rules, a return to consumers is "a price rebate and must be deducted from sales revenues."