The total cost of insurable risk for US organisations rose about 3% in 2004, due largely to management liability and workers' compensation premium increases, according to the RIMS Benchmark Survey, wh

The survey, sponsored and carried out by insurance analytics firm, Advisen, found that higher retentions left over from the hard market also contributed to the overall rise in the cost of risk, even though 2004 was the first full year of soft market conditions since 1998. In addition to premiums and deductibles, the cost of risk calculation includes administrative and other costs associated with property and casualty exposures.

RIMS and Advisen have predicted that underlying economic conditions should ensure that insurance capacity remains at levels that would discourage a free fall in pricing. Prices in general liability and commercial property lines appear to be fulfiling those forecasts.

Prices in both lines showed signs of firming during the first quarter of 2005 compared to the decreases experienced over the last several quarters.

Property lines saw prices continue to decline at a rate of 3.5%, in contrast to a fall of nearly 10% reported in the fourth quarter of 2004. General liability actually experienced an increase in pricing of 1.1% percent, possibly indicating a return to rising premiums.

"We have consistently predicted that this soft market would probably be short lived and relatively shallow, especially compared to the extremely deep and prolonged soft market of the 1990s," said Daniel Kugler, RIMS vice president, membership. "We'll wait to see if we return to the go-go pricing of the last hard market, which we doubt right now, but for the time being, pricing seems to be showing signs of stabilisation."