Data from RIMS Benchmark Survey™ corroborates Advisen’s recent forecast that a dramatic shift to higher rates is unlikely and that due to the impact of the recession, commercial insurance buyers will see a more gradual hardening of the market.
General liability premiums fell 3.8 percent for policies renewing during the first quarter of 2009, as compared to a 5.9 percent decline in the fourth quarter of 2008. The average workers compensation premium fell 2.5 percent which is similar to price decreases over the past several quarters.
The average property renewal was flat for the first quarter as compared to a decline of 3.8 percent in the fourth quarter of 2008. However, there was a wide range of changes in recent renewal premiums for individual property risks: premium changes ranged from a decrease of 11 percent to an increase of 14 percent.
The D&O market continued to be split between financial institution (FI) risks and all other (commercial) risks. Overall, the average D&O premium increased by 3.0 percent, but the increase was driven entirely by financial companies. Excluding FI firms, the average renewal was down 3.0 percent. Higher FI premiums are the outcome of massive losses from the meltdown of the subprime mortgage market and the ensuing credit crisis. By comparison, overall D&O rates fell 1.2 percent in the fourth quarter of 2008 and fell 4.5 percent during that period excluding FI firms.Â
“Most risk managers continue to see flat or slightly lower premiums at renewal,†says Daniel H. Kugler, ARM, CEBS, CPCU, AIC, ACI, member of RIMS board of directors and assistant treasurer, risk management at Snap-on, Inc., from RIMS Annual Conference & Exhibition in Orlando. “The insurance market is still very competitive and, while some insurers are predicting an imminent hard market, there are few signs that rates will rise sharply anytime in the near future.â€
“Even though the credit crisis and the global recession have had a negative impact on insurers’ top and bottom lines, so far financial institution D&O is the only segment tracked by RIMS Benchmark Surveyâ„¢ to respond with higher premiums,†says Dave Bradford, Advisen’s executive vice president and editor-in-chief of RIMS Benchmark Surveyâ„¢. “Insurers struggle against falling rates, increased losses in some lines, and sharply lower investment income due to the credit crisis, but the commercial insurance industry is still overcapitalized. We expect to see a favorable pricing environment for risk managers through 2009.â€
About 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 a “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 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 can be downloaded into any presentation for senior management. The results of the RIMS Benchmark Surveyâ„¢ are available online or in an annually-published book. Visit www.RIMS.org/benchmark for details.
About Advisen
Advisen integrates business information and market data for the commercial insurance industry and maintains critical risk analytics and time-saving workflow tools for over 530 industry leading firms. Through its work for the broadest customer base among information service providers, Advisen delivers actionable information and risk models at a fraction of the cost to have them built internally. 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 offers insight into risk and insurance that is not available on any other system. Advisen is headquartered in New York. For more information, visit http://www.advisen.com or call +1.212.897.4800 in New York or +44(0)20.7929.5929 in London.