Annual publication reveals risk managers experiencing material benefits as soft market continues to create highly competitive insurance company and broker pricing practices
Accompanying broker study shines additional light on market dynamics
NEW YORK, N.Y., April 17, 2008–According to the forthcoming 2008 RIMS Benchmark Survey™ book published by the Risk and Insurance Management Society (RIMS), the commercial insurance industry continued to experience an overall decline in total cost of risk (TCOR) in 2007. The 2008 RIMS Benchmark Survey™ book provides risk managers with objective and actionable insurance market information based on the insurance programs of more than 1,000 participants from the U.S. and Canada.
Insurance professionals use the RIMS Benchmark Survey™ book 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 RIMS Benchmark Survey™ that is updated daily throughout the year. Both the book and the online version are jointly produced by RIMS and Advisen, Ltd., which collects and analyzes the data and, for the online service, provides easy-to-use interactive tools and services.
According to the 2008 RIMS Benchmark Survey™ book, another year free of major natural catastrophes, combined with abundant insurance market capacity, contributed to falling insurance costs, which in turn led to lower average total cost of risk (TCOR) per $1,000 of revenue. Changes in average TCOR between 2006 and 2007 were not evenly distributed across industries, as some watched TCOR rise and a few experienced savings of 30 percent or more. But, while changes in TCOR varied by industry, lower average TCOR was distributed consistently across all sizes of companies.
New to this year’s RIMS Benchmark Survey™ book is a special chapter dedicated to a Broker Services and Remuneration Study. Based on survey responses from more than 1,300 participants, the study found that insurance buyers benefited from a highly competitive insurance brokerage market in 2007. Survey results highlight that brokers are increasingly competing on the basis of services provided to clients, but there are significant differences by size of company and industry group in the types of services provided. The survey also quantifies the differences in average costs to insurance buyers of fee-based broker remuneration as opposed to traditional commission-based remuneration.
Other findings highlighted in this year’s book demonstrate that workers’ compensation continued to be one of the most competitive lines of insurance in 2007, driven by reform measures in several large states, most notably California. Management liability costs were also significantly lower, though having less of an impact on TCOR reduction. And after being buoyed by sharply higher premiums in catastrophe-exposed premiums-a legacy of the record-shattering 2005 hurricanes-property premiums began to edge downward in 2007.
The most significant risk management and insurance event of the year, the meltdown of the U.S. subprime mortgage market, is expected to cost the insurance industry billions of dollars in directors and officers liability and errors and omissions liability losses, and potentially tens of billions in investment-related losses. However, the subprime crisis had no apparent impact on overall insurance costs in 2007.
“The continued soft market has created a buyer’s market,” says John R. Phelps, ARM, CBCP, CPCU, member of RIMS Board of Directors and director of business risk solutions for Blue Cross and Blue Shield of Florida, Inc. “The 2008 RIMS Benchmark Survey™ book and the accompanying broker services and remuneration study are important analysis and trending resources for risk managers that benchmark their programs against the industry. This allows them to take full advantage of the current market conditions.”
“The conditions driving down the cost of risk in 2006 and 2007 should continue in 2008,” says David Bradford, editor-in-chief of Advisen. “Barring large catastrophe losses, which could spark higher premiums, risk managers should continue to see steadily falling insurance costs throughout the year while brokers continue to do battle over pricing and service offerings.”
The 2008 RIMS Benchmark Survey™ book is comprised of data collected in the 12 calendar months of 2007 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 66 pre-defined industry peer groups and more than 90 lines of business. The on-line survey also permits users to define peer groups for benchmarking purposes based on criteria such as industry, territory and revenue.
Purchase orders are now being taken for the 2008 RIMS Benchmark Survey™ book, which is available for purchase at www.RIMS.org/book. 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 data and provides the technology infrastructure for the survey’s online services. Advisen introduced the Data Participation 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 [email protected] 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 for details.
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 more than 4,000 industrial, service, nonprofit, charitable, and governmental entities. The Society serves more than 10,700 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), survey