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Recession Keeps Commercial Insurance Premiums Under Pressure, According to RIMS Benchmark Survey™ 7/28/2009

However, depletion of insurance capacity signals rising commercial insurance rates

NEW YORK (July 28, 2009) — Despite poor financial results, insurance companies continued to compete vigorously for business in the second quarter, according to RIMS Benchmark Survey™, the industry's leading survey of policy renewal prices as reported by North American corporate risk managers. General liability and workers' compensation policies both posted average decreases in renewal premiums. Directors and officers liability (D&O) policies renewed at higher premiums on average, but the increase was due to financial sector companies, a segment that has been bloodied by the subprime mortgage meltdown and credit crisis. Property policies renewed at essentially no change.

Workers' compensation recorded a 2.8 percent average decrease in renewal premiums, as compared to a 1.7 percent drop in the second quarter of 2008, and general liability posted a 1.1 percent drop as compared to nearly a 5 percent decline a year ago. D&O increased 2.9 percent, a reversal of the 6.4 percent average decrease in the second quarter of 2008. However, excluding financial services companies, D&O policies renewed with a 4.1 percent average decrease. Property premiums fell less than 1 percent, which compares to a 6.1 percent drop in the second quarter of 2008.

Rates continue to drift downward despite the loss of $81 billion in policyholders' surplus in 2008 and the first quarter of 2009, according to the Insurance Information Institute. Deteriorating investment markets was the principal cause of falling surplus. Policyholders' surplus is a measure of insurance capacity, meaning that, as surplus falls, the "supply" of insurance also decreases.

"Insurance capacity is disappearing at a startling rate, but the market nonetheless remains competitive," says Dave Bradford, executive vice president of Advisen Ltd. and editor-in-chief of RIMS Benchmark Surveyâ„¢. "As a result of the recession, the demand for insurance capacity also has decreased, which has kept pressure on rates. Companies are downsizing, which means that there is simply less to insure."

Falling demand has prolonged the soft market, but leading indicators tracked by Advisen Ltd.-most specifically the ratio of policyholders' surplus to U.S. Gross Domestic Product, which measures the supply of insurance capacity relative to the demand for that capacity-suggest that the market is close to its bottom.

"If the gloom of the global recession has a silver lining for risk managers, it is the competitive insurance market," says Daniel H. Kugler, ARM, CEBS, CPCU, AIC, ACI, member of RIMS board of directors and assistant treasurer, risk management, at Snap-on, Inc. "The soft market appears to be winding down, but except for increases already taking place in some financial segments, there are no strong signals that rates will rebound sharply in the near future."

About The RIMS Benchmark SurveyTM
RIMS Benchmark Surveyâ„¢ 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 Surveyâ„¢ or by using our "data participation letter" to authorize their broker to provide the client's program details. The letter is available at or by calling 800-655-6590. Risk management professionals can also contribute by e-mailing current and prior year policy schedules to 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 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 or call +1.212.897.4800 in New York or +44(0)20.7929.5929 in London.

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About RIMS

As the preeminent organization dedicated to educating, engaging and advocating for the global risk community, RIMS, the risk management society™, is a not-for-profit organization representing more than 3,500 corporate, industrial, service, nonprofit, charitable and government entities throughout the world. RIMS has a membership of approximately 11,000 risk practitioners who are located in more than 60 countries. For more information about the Society’s world-leading risk management content, networking, professional development and certification opportunities, visit

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For more information, contact:

Josh Salter, RIMS communications manager, (212) 655-6059 or



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