âThe soft market is still going strong,â says David K. Bradford, Advisen executive vice president and editor-in-chief of the Survey. âInsurance capacity remains abundant in almost every line and, as a result of the recession, demand for that capacity has fallen. Unless something happens to wipe out the excess capacity, premiums should continue to drop this year.â
Workersâ compensation saw the largest decrease in average renewal premium during the quarter, falling 3.8 percent. The average property premium was 3.5 percent lower, while general liability dropped 2.5 percent. The average D&O premium, which had been buoyed by rate increases in the financial institution sector in 2008 and 2009, fell throughout the first half of 2010, sliding 3.5 percent in the second quarter.
Although prices continue to fall, predictions for a very active hurricane season may portend higher premiums.
âRisk managers continue to benefit from lower premiums, but a big storm could cause the market to turn at any time,â says Robert Cartwright, loss prevention manager for Bridgestone Americas Holding, Inc. and a member of the RIMS Board of Directors. âForecasts for the 2010 hurricane season are ominous, and a Gulf Coast hurricane could be especially disastrous because of the oil spill. If catastrophe losses soak up enough capacity, prices could increase for all lines, not just property insurance.â
Scientists at Colorado State Universityâs Department of Atmospheric Science forecast 18 named storms in 2010, of which 10 will be hurricanes, and 5 of which will be major hurricanes (Category 3, 4 or 5). They predict the probability of a U.S. major hurricane landfall and Caribbean major hurricane activity to be well above the long-period average. A storm in the Gulf of Mexico could be particularly damaging because of the millions of gallons of oil in the Gulf from the Deepwater Horizon disaster.
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 surveyâs online services. Risk managers and buyers of insurance either contribute directly to RIMS Benchmark Surveyâ¢ or by using our âdata participation letterâ to authorize their broker to provide the clientâs 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.