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Tuesday, April 19 2005 |
| Insurance Market | |
| RIMS Survey Shows Soft Market May Have Hit Bottom | |
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| Publication Date: | 04/18/2005 |
| Source: | Business Wire |
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NEW YORK--(BUSINESS WIRE)--April 18, 2005-- Commercial Insurance Prices Continue to Decline; Some Lines Show Smaller Decrease over Q4 2004; D&O Continues Slide, But Larger Programs Appear to Stabilize Prices in the commercial insurance industry, which declined steadily in 2004 in the first year-long soft market since 1998, may be showing signs of a rebound, according to the RIMS Benchmark Survey(TM), the industry's only comprehensive survey of current policy renewal prices as reported by corporate risk managers. Last quarter RIMS and Advisen, the survey sponsors, predicted that underlying economic conditions should ensure that insurance capacity remains at levels that would discourage a pricing freefall. Prices in General Liability and Commercial Property lines appear to be fulfilling those forecasts. Prices in both lines showed signs of firming during Q1 2005 compared to the decreases experienced over the last several quarters. Property lines saw prices continue to decline at a rate of 3.5 percent, but that was in sharp contrast to nearly 10 percent decline reported in Q4 2004. General Liability actually experienced a slight increase in pricing of 1.1 percent, potentially presaging a return to a period of rising premiums for that line. The 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. The data in this quarter's survey represents the most data ever collected in the history of the survey, Advisen said. "We have consistently predicted that this soft market would probably be short-lived and relatively shallow, especially compared to the extremely deep and prolonged soft market of the 1990s," said Daniel H. Kugler, RIMS Vice President, Membership. "We'll wait to see if we return to the go-go pricing of the last hard market, which we doubt right now, but for the time-being pricing seems to be showing signs of stabilization." Directors and officers (D&O) liability prices seem to offer a microcosm of a market potentially in transition. The initial reports show that prices declined significantly for the quarter, down 8.1 percent. But anecdotal indications from the market suggest that larger programs, such as programs for Fortune 500 companies, have seen D&O prices either flatten or even increase. "Most of the major lines seem to be showing some sign of rebounding; with property and general liability, the trend is quantified and with D&O, it is anecdotal, but we are certainly experiencing some stabilization," said David Bradford, editor-in-chief at Advisen. "We have to wonder, however, if this is the bottom, the beginning of the bottom or a brief respite ahead of another round of large decreases. We doubt it is the latter. Premiums may go a bit lower yet, but it feels like the market is testing its lower bounds." About The Benchmark Survey Risk managers who contribute insurance schedule data to the survey can benchmark both the structure of their commercial insurance programs and the cost of insuring their risk against a highly-relevant group of similar companies. Additionally, survey respondents can use customized software to view detailed schedules of insurance programs for current and past years and to create full-color charts. Both benchmark charts and program charts download into any presentation for senior management. The results of the RIMS Benchmark Survey are available online, published continuously throughout the year, and in a book, published once each year, Visit www.rims.org/benchmark for details. Risk management professionals can contribute their data by e-mailing current and prior year policy schedules to Benchmark@RIMS.org. Data can also be sent by fax to Advisen at 212-655-7453. Advisen will input the data, making it available for online review and comparison within days. Participant support is available by calling 1-800-655-6590. About RIMS The Risk and Insurance Management Society, Inc. (RIMS) is a not-for-profit organization dedicated to advancing the practice of risk management, a professional discipline that protects physical, financial and human resources. Founded in 1950, RIMS represents nearly 4,000 industrial, service, nonprofit, charitable, and governmental entities. The Society serves 8,800 risk management professionals around the world. About Advisen Advisen Ltd. provides insight into underwriting, marketing and purchasing commercial insurance. Advisen's web-based workstation incorporates real-time analytics and research on over 1.5 million companies, and 70 industries. Advisen currently serves nearly 350 leading commercial insurers, insurance brokers, risk management departments of major corporations, and other related organizations. Proprietary offerings of the Advisen service include Benchmarking, Custom Templates for Company Work-ups, Company and Industry Research, Loss Analysis, Management Portfolio Analysis and Policy Comparisons. For more, visit www.advisen.com or call 212-897-4800.
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