Commercial insurance premiums of most lines, including directors and officers, continued to decline during the second quarter of 2007, according to the Risk and Insurance Management Society's Benchmark Survey, released today.
RIMS Benchmark Survey second-quarter reports, a comprehensive survey of current policy renewal prices as reported by corporate risk managers, found that directors and officers liability (D&O) continued to drop, falling an average of 7.29 percent since last year.
According to the survey and analysis conducted by Dave Bradford, editor-in-chief of Advisen, as the soft market approaches its fourth year, difficult lines like D&O, workers' compensation and general liability are dropping and property premiums are remaining stable.
"There are no real surprises," Mr. Bradford told National Underwriter. "Actually, everything is pretty much right on target."
He added that Advisen expected to see directors and officers liability continue to be competitive in a major way and to see "workers' compensation decreases starting to let up a little bit."
He said workers' comp rates have stabilized because although there have been major reforms in California, the effects of those changes "just aren't having the same impact now that they've basically worked their way though the system."
Mr. Bradford noted that continuing reform efforts in states like New York will eventually have an impact, but to a lesser extent than California.
The softening trend started in 2003, he explained. "That's when rates started to turn the corner. We've had the bump in property, of course, but that seems to be reversing itself now, as expected."
Workers' comp rates were smaller in the second quarter, down 1.82 percent, as compared to -3.8 percent in the first quarter, Advisen said.
The survey also found that general liability premiums continued a downward trend with a decrease of 1.16 percent.
The survey showed that property insurance exhibited no change, despite rate decreases reported by 70 percent of survey respondents during the second quarter.
"The good news for risk managers is that property insurance has turned a corner," said Joseph Restoule, RIMS secretary and member of the board of directors. "Although there was no change on average, more than two-thirds of RIMS Benchmark Survey respondents had premium decreases on their property programs this past quarter, including companies with coastal exposures."
What remains to be seen, Mr. Bradford told NU, is what happens this hurricane season. "That's the big variable now. If it's a much worse than average season, or better than expected, either one of those could have a big impact on premiums."
Forecasters are predicting a "much worse than average year," he said. "Severe catastrophe losses could not only send property premiums shooting higher but could also cause the overall soft market to come to a halt."
He added, "We'll know by the time the next quarter numbers come out what the score is there."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.