Average D&O premium continues to fall, but other lines show stability during the quarter.
NEW YORK (January 24, 2011) – Average renewal premiums for commercial lines property & casualty insurance were largely unchanged during the fourth quarter of 2010, according to the RIMS Benchmark Survey™, administered by Advisen Ltd. Directors & Officers Liability (D&O) was the only line tracked by the survey experiencing a material decrease, falling almost 5 percent compared to the prior year. Advisen analysts caution, however, that a turn in the market is not imminent.
“After seven years of falling premiums, I am sure underwriters welcome signs that the soft market will eventually bottom out,” says Dave Bradford, Advisen’s executive vice president and the editor-in-chief of the Survey. “The fourth quarter, however, was probably a temporary lull rather than the harbinger of higher rates anytime soon. The market remains significantly overcapitalized and demand for insurance capacity is weak as an outcome of the Great Recession.”
According to insurance program renewal information reported by risk managers, generally liability, property and workers compensation policies renewed, on average, with essentially no change in premium. The average D&O premium fell 4.6 percent. Large companies, those with revenue greater than $1 billion, saw a sharper decline in average D&O premium than did smaller companies � 5.1 percent as compared to 2.4 percent. Company size was not a meaningful factor for the other lines of business.
“We have seen more carriers exercising underwriting discipline � walking away from business that does not meet their pricing targets � but it is still a very competitive market,” says Robert Cartwright, loss prevention manager for Bridgestone Americas Holding, Inc. and a member of the RIMS board of directors. “Premiums have stabilized a bit over the past couple of quarters, but they still are far below 2003-2004 levels. In some lines they are back to where they were during the soft market of the 1990s. It remains a buyer’s market.”
About The RIMS Benchmark SurveyTM
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. Risk managers and buyers of insurance either contribute directly to RIMS Benchmark Survey™ or by using our “data participation letter” to authorize 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 can be downloaded 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.
As the world’s preeminent organization dedicated to advancing the practice of risk management, the Risk and Insurance Management Society, Inc. (RIMS) is a not-for-profit organization serving more than 3,500 industrial, service, nonprofit, charitable and government entities globally. Founded in 1950, RIMS focuses its efforts on bringing networking, professional development and education opportunities to its membership of nearly 10,000 risk management professionals. RIMS publishes Risk Management magazine, delivered monthly to 17,000 readers, and hosts an annual conference that boasts more than 400 exhibitors and attracts more than 10,000 attendees. For more information on RIMS, visits www.RIMS.org.