An nationwide rise in property rates, which some experts had anticipated going into this year, hasn't panned out, but instead is limited to Southeastern states by 2005 hurricanes, according to an industry survey.
"What we see has very definitely been driven entirely by the Southeast," said David Bradford, editor-in-chief at Advisen, Ltd., discussing the Risk and Insurance Management Society Benchmark Survey.
The Risk and Insurance Management Society Benchmark Survey for the first quarter is a survey of current policy renewal prices reported by corporate risk managers.
Organizations with risks in the Southeast are seeing property rates rise, while those located exclusively in the Northeast, Midwest or the West are remaining stable, Mr. Bradford said.
This is "good news for the buyers," Mr. Bradford said.
"There were a lot of investors who put money in the [insurance] market after Katrina, expecting to see rates skyrocket, and it just hasn't happened to the degree anybody expected."
Mr. Bradford said he sees the market as "softening" rather than "soft."
He noted that although there is no "consistent definition" of soft, "I would say a soft market is when rates are below break-even on an underwriting basis. We're not at that point yet."
In keeping with the soft market conditions evidenced in the last six quarters, the survey found that premiums for directors and officers liability policies dropped 3.5 percent in the first quarter of 2006, and workers' compensation rates declined just over 3 percent.
Karen Beier, a member of the RIMS board of directors, membership and chapter services portfolio, said in a statement, "The insurance market understandably appears a little unsettled by the massive hurricane losses of 2005."
But, risk managers may experience even further softening in the casualty market, she said. "Barring more major catastrophes, premiums should fall further this year."
During the first quarter, general liability rates experienced an upward swing of 5.1 percent, according to the survey results jointly announced by RIMS and Advisen here at the Risk and Insurance Management Society annual conference. Previous quarter survey data showed steadily falling general liability premiums since the fourth quarter of 2003.
Advisen analysts believe that general liability premiums may have been temporarily pulled higher by the spike in property premium levels, but will return to the pervasive softening trend by next quarter.
The RIMS Benchmark Survey is produced by New York-based Advisen, Ltd., which collects and analyzes the data and provides the technology infrastructure for the survey's print and online services.
The results of the survey are available online, published continuously throughout the year, and in a book, published once each year. Details are available at www.rims.org/benchmark for details.
Risk management professionals can contribute their data by e-mailing current and prior year policy schedules to Benchmark@RIMS.org, or data can also be sent by fax to Advisen.
Advisen said corporate risk management participation in the RIMS Benchmark Survey has never been higher, especially with the recent announcement by Advisen that a broker authorization letter is available on www.rims.org/brokerform.
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