The average total cost of risk (TCOR) for businesses rose two percent from $10.70 per $1,000 of revenue in 2012 to $10.90 per $1,000 of revenue in 2013.
It is the third year in a row the cost trend has been up, according to the latest RIMS Benchmark Survey produced by Advisen and the Risk and Insurance Management Society (RIMS).
Businesses paid about five percent more in 2012 than they did in 2011 to cover the total cost of risk.
Key findings of the 2014 RIMS Benchmark Survey include:
- Average TCOR for all companies increased two percent in 2013 after increasing five percent in 2012 and 1.7 percent in 2011 – reflecting the influence of hardening insurance market conditions.
- The contribution of property premiums to average TCOR rose nearly 15 percent, from $3.09 per $1,000 of revenue to $3.54 per $1,000 of revenue.
- Rising prices are influencing companies’ retention of risk.
The survey monitors changes in insurable risk costs and financing methods. TCOR includes insurance premiums, risk management expenses, self-retained losses and administrative expenses.
Jim Blinn, executive vice president at Advisen, said the report also provides insight into the range of significant losses that affect organizations including the Foreign Corrupt Practices Act cases, environmental penalties, False Claims Act cases, and shareholder lawsuit.
The annual RIMS survey uses industry data for more than 52,000 insurance programs from almost 1,500 organizations.