Annual Publication Reveals That, Despite Premium Increases in Catastrophe-Exposed Areas, Costs Continued To Decline in Other Regions and Other Lines of Business
New Orleans, April 30, 2007 — According to the newly-published 2006 Annual Benchmark Survey™ book from the Risk and Insurance Management Society (RIMS), the commercial insurance industry continued to experience an overall decline in total cost of risk in 2006. The 2006 RIMS Benchmark Survey™ book provides risk managers with objective and actionable insurance market information based on the insurance programs of more than 1,200 participants from the U.S. and Canada.
Insurance professionals use the RIMS Benchmark Survey™ to monitor and evaluate programs, help negotiate program costs and design, and navigate the latest risk management trends. This book is the annual summary of the online version of the RIMS Benchmark Survey™ that is updated daily throughout the year. Both the book and the online version are produced by Advisen, Ltd., which collects and analyzes the data and, for the online service, provides easy-to-use interactive tools and services.
According to the RIMS Benchmark Survey™ book, the above-average season for hurricane activity predicted by meteorologists never materialized. All the same, hurricane losses were a significant contributor to the Total Cost of Risk of North American firms and governmental entities in 2006 as the impact of the record-shattering hurricanes of 2005 reverberated across 2006. Property insurance premiums skyrocketed not only in hurricane-exposed coastal areas, but also in California as lessons learned from Hurricane Katrina were factored into earthquake pricing models. But while premiums for properties in catastrophe-exposed regions were off the chart, insurance costs for property insurance in other regions and for most other lines of business continued the downward march begun in 2004.
Key findings in the 2006 RIMS Benchmark Survey™ book include:
- Property costs rose sharply in catastrophe-exposed regions, substantially offsetting decreases in other regions.
- Workers compensation costs fell again in 2006, driven substantially by reform measures in several large states.
- The average total cost of risk fell by 9.2 percent for all survey participants, though there was wide variation by industry.
“The insurance market is very unsettled at this moment,” says Joseph Restoule, RIMS secretary and member of the board of directors. “The RIMS Benchmark Survey™ helps risk managers better assess current conditions and identify important trends impacting insurance purchase decisions. By benchmarking their programs against those of their peers, risk managers can make more informed decisions about how much coverage to buy, how much risk to retain and how much to pay for insurance.”
“Falling insurance costs continue to be driven by rapidly accumulating policyholders’ surplus, the measure of ‘supply’ in the insurance ‘supply and demand’ equation,” says David Bradford, editor-in-chief, Advisen. “The insurance industry recorded a profit in 2005, in spite of record catastrophe losses, which further fueled competition in 2006, leading to a sharp decrease in Total Cost of Risk. Absent unusually severe natural catastrophe losses, accumulating surplus should continue to exert downward pressure on insurance costs in 2007.”
The book is comprised of data collected in the 12 calendar months of 2006 and covers 14 high-level industry groups (Energy, Telecommunications, Professional Services, Banks, Consumer Staples, Education, Government/Non-profit, Healthcare, Information Technology, Utilities, Consumer Discretionary, Industrials, Materials and Non-bank Financials). The online survey provides an expanded view of the insurance industry based on more than four years of data (2003-2007). The online survey also provides a broader view of insurance groups, covering 35 lower-level industry groups.
Purchase orders are now being taken for the book, which will ship in mid-May. The book is available for purchase at www.RIMS.org/benchmark. Special discounts apply to RIMS members and survey data contributors.
About The RIMS Benchmark Survey™
The RIMS Benchmark Survey™ is produced by Advisen, Ltd., which collects and analyzes the data and provides the technology infrastructure for the survey’s online services. Advisen introduced the “Broker Authorization Letter” that enables Risk Managers and buyers of insurance to contribute to the RIMS Benchmark Survey™ by designating their broker to provide the client’s program details. The letter is available at www.RIMS.org/brokerform or by calling 800.655.6590. Risk management professionals can also contribute by e-mailing current and prior year policy schedules to Benchmark@RIMS.org or by faxing to 212.655.7453.
Risk managers who contribute data to the survey can benchmark the structure of their commercial insurance programs, retained loss costs, exposure demographics and Total Cost of Risk (TCOR) against a highly-relevant group of peer companies. Additionally, survey respondents can use software personalized and configured for their needs to view detailed schedules of insurance, programs for current and past years and full-color program tower charts. Both benchmark charts and program charts download into any presentation for senior management. The results of the RIMS Benchmark Survey™ are available online or in an annually-published book. Visit www.RIMS.org/benchmark.
About the Risk and Insurance Management Society, Inc.
The Risk and Insurance Management Society, Inc. (RIMS) is a not-for-profit organization dedicated to advancing the practice of risk management, a professional discipline that protects physical, financial and human resources. Founded in 1950, RIMS represents nearly 4,000 industrial, service, nonprofit, charitable, and governmental entities. The Society serves more than 10,000 risk management professionals around the world. For more information, visit www.RIMS.org.
Advisen Ltd. equals success for insurance professionals, driving growth and profitability through the broadest platform of analytics and information services. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry’s deepest data sets with proprietary analytics and applications that drive the risk and insurance lifecycle. Advisen is headquartered in New York with offices in London. For more information, visit www.advisen.com or call 212.897.4800. .Tags: Advisen, benchmarking, Risk and Insurance Management Society (RIMS)