Seven years and running, the soft market shows few signs of loosening its grip on commercial insurance pricing, according to a new industry study.
Average premiums in every line tracked by the RIMS Benchmark Survey, fell in the first quarter. However, the survey, administered by Advisen Ltd., says that forecasts for an above-average hurricane season may signal rising premiums on the horizon.
“Insurance capacity is abundant throughout the commercial lines market, but the lingering impact of the global recession has reduced the demand for that capacity,” said Dave Bradford, Advisen executive vice president. “Abundant capacity coupled with diminished demand keeps downward pressure on rates. As things now stand, insurance buyers can anticipate another year of favorable insurance prices, although catastrophe claims always are a wild card in the pricing cycle.”
General liability came in as the most competitive line of commercial insurance during the quarter, which has been the case throughout much of the soft market phase. General liability premiums fell an average of 4.4 percent.
The average property premium, which had been flat over the past several quarters, fell 2.9 percent.
The average workers’ compensation premium was down 2.0 percent.
Average directors and officers liability (D&O) premium was off 1.1 percent. D&O average premium had been flat to slightly higher throughout 2009 due to rate increases in the financial institution sector, but those increases now have abated.
“Rate levels are down, but insurers nonetheless posted good results in 2009,” said Robert Cartwright, loss prevention manager for Bridgestone Americas Holding Inc. and a member of the RIMS Board of Directors. “As a result, underwriters have not been highly motivated to push for higher premiums. That certainly is good news for risk managers.”
But as forecasters predict an active hurricane season this year, prices could increase across the board, Cartwright added. Colorado State University hurricane forecasters predict there will be 15 named storms, eight hurricanes and four major hurricanes in 2010.
RIMS Benchmark Survey is produced by Advisen Ltd. The results of the RIMS Benchmark Survey are available online or in an annually-published book. The Risk and Insurance Management Society Inc. is a not-for-profit organization representing more than 3,500 industrial, service, nonprofit, charitable and government entities globally.
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