RIMS survey reveals small rises in general liability, property and workers compensation commercial insurance premiums

PPI complaints surge

An eight year period of falling commercial insurance rates might be at its end, suggests a new survey by RIMS, which revealed that average renewal premiums in three of four lines of business tracked increased in the third quarter.

The survey tracked changes in average programme renewal premiums for director and officers’ liability, general liability and property and workers’ compensation.

Director and officers’ liability posted a decrease of 1.9%. All other lines increased, general liability rising 1.2%, property 1.6% and workers’ compensation 2.1%.

The RIMS Benchmark Survey was administered by Advisen Ltd. and is based entirely on data collected from risk management professionals in the US.

“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,” commented Dave Bradford, President of Advisen’s Research Division and editor-in-chief of the survey.

“Sharply higher rates like we saw in 2001 are nowhere in sight, though. The market is still quite competitive.”

Premiums skyrocketed in 2001 and 2002, following a deep and prolonged soft market. The stock market crash of 2000-2002 and massive insured losses from the September 11 terrorist attacks are often cited as catalysts for that hard market.

“Average premiums may be showing modest increases, but it seems pricing generally is still quite favourable in most lines,” so Frederick Savage of RIMS Board of Directors.

“It would likely take a very large catastrophe or series of catastrophes to trigger a hard market along the line of what we saw a decade ago. Of course, that could happen at any time, but at the moment the insurance market seems to be behaving rationally. Risk managers should budget for somewhat higher insurance costs, but capacity remains abundant, which should help to dampen rate increases.”