Commercial Insurance Price Uptick: RIMS Data

RIMs noted that last quarter RIMS and Advisen, the survey sponsors, predicted that underlying economic conditions should ensure that insurance capacity remains at levels that would discourage a pricing freefall. It said that the latest data on prices in general liability and commercial property lines appear to be fulfilling those forecasts.

Prices in both lines, RIMS said, showed signs of firming during the firs quarter compared to the decreases experienced over the last several quarters.

Although property lines saw prices continue to decline at a rate of 3.5 percent, RIMS said that was in sharp contrast to nearly 10 percent decline reported in the last quarter of 2004.

The group found that general liability actually experienced a slight increase in pricing of 1.1 percent, potentially presaging a return to a period of rising premiums for that line.

RIMS Benchmark Survey is produced by Advisen, Ltd., which collects and analyzes the data and provides the technology infrastructure for the survey's online services. The data in this quarter's survey represents the most data ever collected in the history of the survey, Advisen said.

"We have consistently predicted that this soft market would probably be short-lived and relatively shallow, especially compared to the extremely deep and prolonged soft market of the 1990s," said Daniel H. Kugler, RIMS vice president, membership.

Mr. Kugler added, "We'll wait to see if we return to the go-go pricing of the last hard market, which we doubt right now, but for the time-being pricing seems to be showing signs of stabilization."

RIMS said directors and officers (D&O) liability price data seems to offer a microcosm of a market potentially in transition. Initial survey reports show that prices declined significantly for the quarter, down 8.1 percent. But anecdotal indications from the market suggest that larger programs, such as programs for Fortune 500 companies, have seen D&O prices either flatten or even increase.

"Most of the major lines seem to be showing some sign of rebounding; with property and general liability, the trend is quantified and with D&O, it is anecdotal, but we are certainly experiencing some stabilization," said David Bradford, editor-in-chief at Advisen. "We have to wonder, however, if this is the bottom, the beginning of the bottom or a brief respite ahead of another round of large decreases. We doubt it is the latter. Premiums may go a bit lower yet, but it feels like the market is testing its lower bounds."

RIMS said risk managers who contribute insurance schedule data to the survey can benchmark both the structure of their commercial insurance programs and the cost of insuring their risk against a highly-relevant group of similar companies.

Survey respondents can also use customized software to view detailed schedules of insurance programs for current and past years and to create full-color charts. Both benchmark charts and program charts download into any presentation for senior management, RIMS said.

RIMS Benchmark Survey results are available online, published continuously throughout the year, and in a book, published once each year. Details are at www.rims.org/benchmark .

RIMS said risk management professionals can contribute their data by e-mailing current and prior year policy schedules to Benchmark@RIMS.org. Data can also be sent by fax to Advisen at 212.655.7453.

Advisen inputs the data, and RIMS said it is available for online review and comparison within days. Participant support is available by calling 1-800-655-6590.