In a relatively stable insurance market, businesses paid nearly one percent less in 2014 than they did in 2013 to cover the total cost of risk (TCOR) after three consecutive years of increases, according to the 2015 RIMS Benchmark Survey.
The average TCOR fell one percent from $10.90 per $1,000 of revenue in 2013 to $10.80 in 2014.
TCOR is the cost of insurance, plus the costs of the losses that are retained, and the administrative costs of the risk management department.
“The 2014 survey results reflect the overall stability of the U.S. property/casualty market. One notable driver is the increasing role of alternative capital in assisting reinsurers to deal with economic uncertainties. A related factor is the rising importance of predictive models among insurers not only in the area of property, but also for cyber and casualty,” said Jim Blinn, executive vice president and global product manager at Advisen, which produces the survey for the Risk and Insurance Management Society (RIMS).
Key findings from this year’s RIMS Benchmark Survey:
- Management liability, workers’ compensation, liability, and property costs declined.
- Risk management administration costs dropped 5 percent as costs for both outside services and risk management department declined.
- Commenting on what the industry expects in the second half of 2015, Blinn said commercial property/casualty insurers are beginning to see a softening market. “We are looking at a period of rate decreases in insurance premiums owing to rising competition in the market and more than enough available capacity.”
The survey uses industry data on 52,000 insurance programs from almost 1,500 organizations. It tracks changes in insurance policy renewal prices as reported by North American corporate risk managers.
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