Average Insurance Premiums Hold Steady in Second Quarter
September 2006
According to the RIMS Benchmark Survey™, commercial
insurance premiums were flat to slightly lower in the second quarter of this
year compared to the prior year. The RIMS Benchmark Survey is the industry's
leading comprehensive survey of current policy renewal prices as reported by
corporate risk managers.
by Advisen Ltd.
In the second quarter, directors and officers (D&O) liability insurance premiums
dropped 3.5 percent, the largest decrease of any line of business tracked by
the Survey. This reduction was due largely to rate cuts for small- to-medium-sized
businesses.
Average property insurance premiums were largely unchanged, although the
average masks significant discrepancies between policies in hurricane-exposed
regions and policies in other parts of the country. Insureds in Florida and
the Gulf Coast states are experiencing massive increases in the aftermath of
the record-shattering 2005 hurricane season. Those in the mid-Atlantic states
are also encountering higher premiums, while insureds in the Western and, especially,
Midwestern states are enjoying substantial savings in property premiums.
"Aside from the increase in property insurance premiums in catastrophe-exposed
regions, insurance premiums continue to trend downward," said David Bradford,
editor-in-chief at Advisen. "We expect to see this trend continue for the remainder
of 2006. The industry had a good first quarter which will further fuel competition."
"Forecasting services are predicting another active hurricane season," said
Joseph Restoule, member, RIMS Board of Directors, Membership and Chapter Services
portfolio. "Risk managers are generally benefiting from softer rates but companies
in natural catastrophe-exposed regions aren't likely to see property insurance
pricing conditions improve anytime soon."
As predicted by Advisen analysts in the first quarter, general liability,
which experienced a slight uptick in average pricing in the first quarter, resumed
its downward slide in the second quarter, falling 1.2 percent. Advisen analysts
claimed the increase in general liability premiums were a temporary response
to a spike in property premium levels. Workers compensation was essentially
unchanged.
About the RIMS Benchmark Survey™
Risk managers who contribute insurance schedule data to the survey can benchmark
both the structure of their commercial insurance programs and the cost of insuring
their risk 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.advisen.com/ for details.
The 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 management professionals can contribute by e-mailing current
and prior year policy schedules to Benchmark@RIMS.org or by faxing to (212) 655–7453. During the last quarter, Advisen introduced
an additional way to help risk managers contribute to the RIMS Benchmark Survey.
The advent of the "Broker Authorization Letter" 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.advisen.com/ or by calling (800) 655–6590.
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