Despite the economic turmoil and the second worst year for insured natural catastrophe losses, the total cost of risk paid by businesses dropped in 2008 by 9.4 percent per $1,000 of revenue.
The drop was largely attributable to lower average premiums in almost every line of business, according to the 2009 RIMS Benchmark Survey, and annual guide to the cost of risk for commercial insureds in North America. The total cost of risk (TCOR) is the sum of insurance premiums, retained losses and risk management administrative costs.
“Risk managers in nearly every industry tracked by the survey saw the average cost of risk fall in 2008,” said Dave Bradford, editor-in-chief of the 2009 RIMS Benchmark Survey book and executive vice president at Advisen Ltd.
The survey enables risk managers to compare their TCOR to similar organizations and benchmark their insurance program limits and retentions. The report is based on data collected on more than 1,300 companies in the U.S. and Canada. Data was compiled and analyzed by Advisen Ltd. for the Risk and Insurance Management Society, Inc. (RIMS).
The newest survey also touches on broker, workers’ compensation and risk management issues.
The broker portion of the survey found that compensating agents on a fee basis results in material savings over commission-based compensation.
The workers’ compensation section of the survey reveals that approximately 60 percent of companies have moderate to significant deficiencies in workers’ compensation claims management.
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