Soft market conditions continued during the third quarter, but the rate of decrease slowed according to the RIMS Benchmark Survey™, administered by Advisen Ltd. Every line of insurance tracked by the survey posted a decrease in average premium, though only nominally so for general liability and workers’ compensation.
“Premiums didn’t fall much this past quarter, at least not in a couple of key lines, but the soft market is far from over,” says Dave Bradford, Advisen’s Executive Vice President and editor-in-chief of the Survey. “If insurers avoid large losses this hurricane season, which seems likely at this point, competition may pick up across all lines. There is still too much capacity chasing too little premium.”
Average premiums for general liability and works compensation both fell less than 1 percent. The average property premium declined about 3 percent and the average D&O premium dropped 4 percent.
Advisen researchers and other analysts forecast protracted commercial lines soft market conditions due in part to the lingering effects of the global recession. Companies that downsized or went out of business have reduced the amount of insurance premium in the market, encouraging insurance companies to vigorously compete for their share of a shrinking pie. Economists have declared the recession over, but recovery has been slow and written premium remains depressed in many lines.
“Rates in some lines are back to where they were at the depths of the last soft market,” says Robert Cartwright, loss prevention manager for Bridgestone Americas Holding, Inc. and a member of the RIMS board of directors. “That might suggest that the market is poised for a turn, but competition is still intense. Barring a large catastrophe loss, insurance buyers should continue to enjoy favorable pricing for the foreseeable future.”
About The RIMS Benchmark SurveyTM
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 managers and buyers of insurance either contribute directly to RIMS Benchmark Survey™ or by using our “data participation letter” to authorize their broker to provide the client’s 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.