Each fall, the A.M. Best Company issues “Aggregates & Averages,” a publication that brings together all property-casualty insurer financials in a single volume. It generally takes a full nine months from the ending date for A.M. Best Co. to create the 750+ page work from 2,300+ insurer annual statements. The 2010 edition was released this week.
Some of the figures of interest every year are the final roll-up of industry premiums and losses, as well as subsets by the same type of policy. IN&V covers this sort of data for articles throughout the year. Beyond the basic loss and premium roll-ups, however, the data also provides insight into the industry’s financials for trends. And there is no better example of a trend-setting figure than direct contingent commissions paid out.
IN&V has covered the trends in contingent commissions ever since Eliot Spitzer first brought suit against Marsh McLennan in late 2004. At that time, contingents had increased to all-time highs of about $4.5 billion and exceeded 1% of net written premiums. Starting in 2007, however, contingent payments began to fall, and 2009 now marks the third year in a row that contingents have both fallen in total dollars paid and as a percentage of premium. As shown in the chart below, the drop exceeds-30% from over $4.5 billion paid out to just under $3 billion; as a percentage of premiums, it drops from 1.04% to 0.70%.