Commercial Insurance Prices Continue to Decline
New York, October 26, 2004 – The commercial insurance industry experienced its third consecutive quarter of declining prices, according to the RIMS Benchmark Survey, the industry’s only comprehensive survey of current policy renewal prices as reported by corporate risk managers.
The third quarter renewal information, which was released today, was summarized by Advisen Ltd. for the Risk and Insurance Management Society (RIMS).
The declines were across most major lines and represented the third consecutive quarter in which average premiums dropped in one or more major lines. The survey also found that in the third quarter, the majority of Directors & Officers (D&O) Liability, Property and General Liability policies renewed at comparable or lower rates than they had been renewed for the previous year. It was the second straight quarter in which the number of lower-priced policies outpaced those with price increases.
“The resilience of this soft market is certainly clear from the pervasive price declines across the major lines,” said Daniel H. Kugler, RIMS Vice President, Membership. “For another quarter, we saw most policy renewals were less expensive than last year and now prices across the board on most lines have declined. As we predicted last quarter, we still believe these declines will continue at least through the end of the year.”
The survey results indicate that prices in most major insurance lines– Directors & Officers (D&O) Liability, Property, Excess Liability, Fiduciary Liability and General Liability– all experienced price declines. It was the first quarter in which the average price of all D&O renewals declined and marked a significant downturn for Fiduciary Liability which had been experiencing healthy increases all year.
Premium prices for Property, Excess Liability and Fiduciary Liability insurance all dropped between two and three percent. D&O and General Liability premiums dropped by slightly less than one percent. Workers’ Compensation remained an aberration among the major lines. Premiums in Workers’ Compensation rose in the quarter by just over 1.5 percent.
“The numbers this quarter firmly declare that we are experiencing a soft market, though the declines are not excessive in any segment,” said David Bradford, editor-in-chief at Advisen. “And don’t miss the significant point: most underwriters are losing more pricing negotiations than they are winning. The key questions remain: will premium rates get much lower? And how long will the soft market last beyond 2004?”
Advisen, a provider of specialized information, analytic and benchmarking tools for commercial insurance professionals, analyzes the survey results continuously, offering a dynamic and virtually real-time window into the current purchase patterns of commercial insurance buyers. The results represent data compiled from over 1,400 organizations, the largest number of respondents in twenty years of benchmark surveys.
About The 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 similar companies. Additionally, survey respondents can use customized software to view detailed schedules of insurance programs for current and past years and to create full-color charts. Both benchmark charts and program charts download into any presentation for senior management.
The Risk and Insurance Management Society, Inc. (RIMS) is a not-for-profit organization dedicated to advancing the practice of risk management, a professional discipline that protects physical, financial and human resources. Founded in 1950, RIMS represents nearly 4,000 industrial, service, nonprofit, charitable, and governmental entities. The Society serves 8,800 risk management professionals around the world.
Advisen Ltd. provides insight into underwriting, marketing and purchasing commercial insurance. Advisen’s web-based workstation incorporates real-time analytics and research on over 1.5 million companies, and 70 industries. Advisen currently serves nearly 350 leading commercial insurers, insurance brokers, risk management departments of major corporations, and other related organizations. Proprietary offerings of the Advisen service include Benchmarking, Custom Templates for Company Work-ups, Company and Industry Research, Loss Analysis, Management Portfolio Analysis and Policy Comparisons.
