NU Online News Service, Aug. 11, 3:02 p.m. EDT
A survey on four commercial lines suggests that the soft market may be bottoming out, according to the Risk and Insurance Management Society, Inc.
The RIMS Benchmark Survey tracked the lines of business— general liability, property, workers’ compensation and directors and officers insurance—during the 2011 second quarter. The survey indicates significant tightening in the price declines that have defined the soft market.
RIMS, in conjunction with the consulting firm Advisen, says during the second quarter general liability, property and workers’ comp all fell by less than 1 percent on average. D&O liability policies renewed 4.5 percent lower.
The survey is based on the policy renewals reported by risk managers.
“Pricing has been fairly stable in three of the last four quarters, but it is too early to declare the soft market over,” says Dave Bradford, Advisen executive vice president and editor-in-chief of the survey, in a statement. “Rates may have stabilized for now, but barring major catastrophe losses, there are few signs of materially higher premiums on the horizon.”
He adds that commercial-property and casualty insurers remain well capitalized and along with the sluggish economy, it “could make it difficult for underwriters to push through rate increases.”
RIMS notes that despite record-setting catastrophe losses for the 2011 first half, the impact “has not been sufficient to trigger widespread premium increases outside of the affected areas.”
Frederick Savage, a member of RIMS board of directors, notes that while buyers still benefit from “a competitive insurance market,” additional catastrophe losses could change that situation “quickly.” Noting this is the middle of hurricane season, a significant loss could spark higher premiums “at least for property risks.”