And the Survey Says: Lower Premiums Continue
According to results from the Risk & Insurance Management Society (RIMS) Inc.’s fourth-quarter benchmark survey Risk managers continue to pay lower premiums across the board for their commercial insurance policies.
Leading the downward trend in premiums, Directors and officers liability premiums declined an average 11% in the fourth quarter. The sharp price cut occurred even in the face of concerns about the rocky subprime mortgage market and related losses. General liability policy dipped l 3% on average, while property policy premiums dropped 1.3% on average in the fourth quarter, says RIMS. Workers compensation premiums also decreased slightly, down 1.4% on average during the fourth quarter.
According to John R. Phelps, a member of the board of directors of New York-based RIMS and director of business risk solutions for Blue Cross & Blue Shield of Florida Inc., the major decline drop in D&O premiums and moderate declines in others should serve to further stimulate the soft market.
Says Phelps, “The downward pricing momentum in the fourth quarter, especially in D&O, suggests that the soft market still hasn’t hit bottom.”
David Bradford, editor-in-chief of Advisen Ltd., concluded, “Insurance companies are still posting very good results and probably will end the year with an underwriting profit.” He adds this will “further stimulate competition, and buyers can look forward to yet lower insurance costs, but the soft market will eventually take its toll on insurer earnings—maybe starting as early as the second quarter of 2008.”
Published on January 15, 2008
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