Posted on 24 Jan 2011
Average renewal premiums for commercial lines property & casualty insurance were largely unchanged during the fourth quarter of 2010, according to the RIMS Benchmark Survey™, administered by Advisen Ltd. Directors & Officers Liability (D&O) was the only line tracked by the survey experiencing a material decrease, falling almost 5 percent compared to the prior year. Advisen analysts caution, however, that a turn in the market is not imminent.
“After seven years of falling premiums, I am sure underwriters welcome signs that the soft market will eventually bottom out,” says Dave Bradford,
Advisen’s executive vice president and the editor-in-chief of the Survey. “The fourth quarter, however, was probably a temporary lull rather than the harbinger of higher rates anytime soon. The market remains significantly overcapitalized and demand for insurance capacity is weak as an outcome of the Great Recession.”
According to insurance program renewal information reported by risk managers, generally liability, property and workers compensation policies renewed, on average, with essentially no change in premium. The average D&O premium fell 4.6 percent. Large companies, those with revenue greater than $1 billion, saw a sharper decline in average D&O premium than did smaller companies – 5.1 percent as compared to 2.4 percent. Company size was not a meaningful factor for the other lines of business.
“We have seen more carriers exercising underwriting discipline – walking away from business that does not meet their pricing targets – but it is still a very competitive market,” says Robert Cartwright, loss prevention manager for Bridgestone Americas Holding, Inc. and a member of the RIMS board of directors. “Premiums have stabilized a bit over the past couple of quarters, but they still are far below 2003-2004 levels. In some lines they are back to where they were during the soft market of the 1990s. It remains a buyer’s market.”