NU Online News Service, June 20, 1:44 p.m. EDT
In spite of the fact that commercial renewal prices continued to fall in the first quarter, a composite pricing index based on reports from 1,200 risk managers shows that prices are still 15 percent higher than at year-end 2000.
According to New York-based Advisen, a provider of insurance-related data and research, average first-quarter 2011 commercial renewal prices were 2.4 percent lower than in first-quarter 2010.
The decline was the second consecutive 2.4 percent drop, according to a history of Advisen ADVx premium indices dating back to early 2001. The history shows a string of earlier year-over-year declines in first-quarter numbers hovering between 3.9 percent and 5.5 percent (between the 2005 first quarter and 2009 first quarter).
Back in the 2004 first quarter, the ADVx, which tracks changes in average premiums paid upon the renewal of commercial-lines insurance policies, had reached a level of 149.60, indicating that prices were nearly 50 percent above the 2000 year-end base index of 100.
Since then, cumulative price drops have amounted to more than 23 percent, bringing overall commercial prices down to a level that is now 15 percent above year-end 2000.
The index is a composite of four lines of business—domestic property, general liability, workers' compensation, and directors and officers liability—weighted by their relative premium volume. Each of these lines has experienced price drops since 2004. Both D&O and property price levels, however, remain well above 2000 year-end prices, with the D&O index standing at 138.83 and property at 136.55 as of March 31, 2011.
In contrast, the Advisen index reveals that general-liability prices are now roughly 4 percent lower than they were at year-end 2000 (the index is 95.78), and workers' comp prices are 2 percent lower (with a March 31, 2011 index of 98.01).
During the 2011 first quarter, the reported declines from last year for each line were as follows:
• D&O: 3.6 percent.
• Domestic property: 2.6 percent.
• General liability: 1.4 percent.
• Workers' comp: 2.1 percent.
© Touchpoint Markets, 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.