NU Online News Service, Nov. 15, 2:24 p.m. EST
More data on the insurance industry, this time complied by the RIMS Benchmark Survey, points to an end to the soft market.
The Risk and Insurance Management Society survey, administered by Advisen, tracks renewal premiums for directors & officers' liability, general liability, property, and workers' compensation.
Of the four, only D&O showed rate decreases in the third quarter.
"Indications have been strong over the past couple of quarters that the market was near bottom, so it's not surprising to see premiums drifting upward a bit now," says David Bradford, president of Advisen's research and editorial division, in a statement.
Average renewals increased 1.2 percent in general liability, 1.6 percent in property and 2.1 percent in workers' compensation, according to results of the survey.
D&O was down nearly 2 percent.
Nevertheless, RIMS board member Frederick Savage said that "pricing generally is still quite favorable in most lines."
Bradford adds, "Sharply higher rates like we saw in 2001 (the last hard market) are nowhere in sight. The market is still quite competitive."
Rate increases will likely be slowed by abundant capacity in the market, says Savage, but risk managers "should budget for somewhat higher insurance costs."
It would take a large catastrophe or a series of catastrophes to seriously turn the market hard, he notes. The stock market crash and Sept. 11 terrorist attacks spurred the last hard market, for example.
Investment yields, low interest rates, less-favorable reserves and high catastrophe losses appear to be working together to slowly turn the market, according to executive during third-quarter conference calls.
However, price increases are not eclipsing loss costs.
Financial services specialists, Keefe, Bruyette and Woods recently said price increases will not improve return on equity in the near future, at least for the 46 insurers and reinsurers it follows.
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