RIMS Benchmark Survey™ Reports Continued Soft
Market for Commercial Insurance Premiums during Third Quarter 2007
October 2007
Steady erosion of commercial insurance industry
pricing continued during the third quarter of 2007, according to the RIMS Benchmark
Survey™, the industry's leading comprehensive survey
of current policy renewal prices as reported by corporate risk managers.
by
Advisen Ltd.
As has been the case in recent quarters, only property insurance showed an
increase in the average renewal premium, which was driven substantially by companies
in earthquake-exposed regions. Average property premiums rose 2.1 percent in
the third quarter of 2007. Once again, directors and officers liability (D&O)
posted the largest decrease at 3.9 percent, while average general liability
premiums decreased by 3.2 percent. Workers compensation averages, while still
falling, are decreasing at a slower rate; they experienced a drop of 1.5 percent
during the third quarter, due most likely to the impact of reform measures in
several large states, according to an Advisen analysis. These reform measures
had previously driven premiums sharply lower but have now worked their way through
the system.
"For the most part, pricing trends continue to be very positive for commercial
buyers," says John R. Phelps, ARM, CPCU, member of RIMS Board of Directors and
director of business risk solutions for Blue Cross and Blue Shield of Florida,
Inc. "All indicators point to further improvements in the fourth quarter, barring
a major catastrophe."
"The soft market is driven by rapidly increasing policyholders' surplus,
which equates to insurance capacity," says David Bradford, editor-in-chief of
Advisen. "Underwriting profits and strong investment returns continue to add
to surplus, which suggest that this soft market has a long way to go before
it reaches bottom."
About the RIMS Benchmark Survey™
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. Advisen introduced the "Broker Authorization
Letter" that 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. 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 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.
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