Risk and Insurance Management Society’s latest survey found average renewal premium rates rising in three out of the four business lines it tracked.
This “strongly suggests” that an eight-year period of falling commercial insurance rates is at its end, according to New York-based RIMS.
The RIMS Benchmark Survey tracks changes in average program renewal premiums for director & officers liability (D&O), general liability (GL), property and workers’ compensation, as reported by risk managers. Results of the survey, administered by Advisen, were released on Nov. 15.
Only D&O Posted Rate Decline
Of the four lines, only D&O posted a decrease, falling 1.9 percent, the survey found. The average renewal premium rose 1.2 percent in GL, 1.6 percent in property and 2.1 percent in workers’ comp.
“Indications have been strong over the past couple of quarters that the market was near bottom, so it’s not surprising to see premiums drifting upward a bit now,” said Dave Bradford, president of Advisen’s research and editorial division and editor-in-chief of the survey.
‘Market Is Still Quite Competitive’
But Bradford said he’s not expecting significant rate increases: “Sharply higher rates like we saw in 2001 are nowhere in sight, though. The market is still quite competitive.”
Premiums skyrocketed in 2001 and 2002, following a deep and prolonged soft market. The stock market crash of 2000-2002 and massive insured losses from the Sept. 11 terrorist attacks are often cited as catalysts for that hard market.
“Average premiums may be showing modest increases, but it seems pricing generally is still quite favorable in most lines,” added Frederick Savage, a board director at RIMS.
It would likely take a very large catastrophe or series of catastrophes to trigger a hard market along the line of what we saw a decade ago, he said. “Of course, that could happen at any time, but at the moment the insurance market seems to be behaving rationally. Risk managers should budget for somewhat higher insurance costs, but capacity remains abundant, which should help to dampen rate increases.”
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