View this article online: https://www.insurancejournal.com/news/national/2010/07/22/111813.htm
Decreases in average renewal premiums continued to show up for commercial clients during the second quarter of 2010, according to risk managers.
Premium decreases of between 2.5 and 3.8 percent were reported for property, general liability, directors and officers liability (D&O) and workers’ compensation insurance, reports the the RIMS Benchmark Survey, administered by Advisen Ltd. Excess capacity in the commercial lines insurance marketplace continued to keep premiums under pressure, the report says.
Workers’ compensation saw the largest decrease in average renewal premium during the quarter, falling 3.8 percent. The average property premium was 3.5 percent lower, while general liability dropped 2.5 percent, according to the survey. The average D&O premium, which had been buoyed by rate increases in the financial institution sector in 2008 and 2009, fell throughout the first half of 2010, sliding 3.5 percent in the second quarter.
“Insurance capacity remains abundant in almost every line and, as a result of the recession, demand for that capacity has fallen. Unless something happens to wipe out the excess capacity, premiums should continue to drop this year,” said David K. Bradford, Advisen executive vice president and editor-in-chief of the Survey.
An active hurricane season could lead to higher premiums in the near future.
“Risk managers continue to benefit from lower premiums, but a big storm could cause the market to turn at any time,” says Robert Cartwright, loss prevention manager for Bridgestone Americas Holding Inc. and a member of the RIMS Board of Directors.
Scientists at Colorado State University’s Department of Atmospheric Science forecast 18 named storms in 2010, of which 10 will be hurricanes, and five of which will be major hurricanes (Category 3, 4 or 5). They predict the probability of a U.S. major hurricane landfall and Caribbean major hurricane activity to be well above the long-period average. A storm in the Gulf of Mexico could be particularly damaging because of the millions of gallons of oil in the Gulf from the Deepwater Horizon disaster.
Source: Risk and Insurance Management Society Inc.