According to the newly released 2013 RIMS Benchmark Survey, the average Total Cost of Risk (TCOR) increased in 2012 - climbing five percent in 2012 as opposed to its increase of only 1.7 percent in 2011 - driven largely by firming market conditions. The annual RIMS survey, produced with Advisen Ltd, is a single source of benchmark statistics with industry data for more than 52,000 insurance programs from almost 1,500 organizations.
Key findings of the 2013 RIMS Benchmark Survey:
- Average TCOR for all companies increased five percent, from $10.19 per $1,000 of revenue to $10.70 per $1,000 of revenue - the result of hard market conditions.
- A review of Advisen's umbrella / excess pricing and limit data showed that pricing influences excess insurance program limit buying trends. When prices were dropping, insurance buyers tended to increase their limits more. On the other hand, when prices were increasing, they tended to increase their limits less.
- The contribution of property premiums to average TCOR grew nearly six percent, from $2.92 per $1,000 of revenue to $3.09 per $1,000 of revenue.
"While 2012 experienced a reduction in insured catastrophe losses, insurers continued to implement rate increases through the year" said Jim Blinn, Executive Vice President of Advisen's Information and Analytics unit and Executive Editor of the Survey. "Continued pressure on underwriting results and a low interest rate environment motivated underwriting management to seek these higher rates."
"Rates are rising, but our research shows that improving rates attract new capacity, which makes it difficult to sustain the trend towards progressively higher rates," said RIMS Board Director Michael D. Phillipus, ARM. "The wealth of information available in the RIMS Benchmark Survey arms risk practitioners with powerful industry insight that can help shape their understanding of the market and allow them to fulfill their responsibilities with greater confidence and clarity."
The 2013 RIMS Benchmark Survey is available for purchase at www.RIMS.org/book. Data contributors receive the book for free; RIMS members who did not contribute data, $599; Non-RIMS members who did not contribute data to this edition pay $899. For questions about ordering, billing or for special pricing for multiple copies, e-mail RIMScore@advisen.com.
On Thursday, July 18th at 11 a.m. EDT, a panel of risk and insurance experts from Allied World, RIMS and Advisen will present a free one-hour, live webcast titled "State of the P&C Insurance Market Meets the RIMS Benchmark Survey." For more information about the webinar or to register, visit https://advisen.omnovia.com/register/68501370889939.
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. Contributors receive the final RIMS Benchmark Survey TM at no charge.