Airmic report shows continued soft market in spite of major disasters
The cost of commercial property and business interruption cover remains at a historic low, according to the results from the second Airmic / Advisen benchmarking survey.
According to Willis, who sponsored the study, there is unlikely to be any recovery in prices soon.
“This is the eighth year of benign conditions for buyers in this class of business, and one has to ask whether it can accurately be described as a soft market any more or whether it has perhaps become the ‘new normal’,” said Airmic technical director Paul Hopkin.
“The fact that even the recent spate of large natural and other catastrophes could not budge rates upwards suggests that they are likely to remain depressed for a while yet.”
Paul Maynard, Chief Placement Officer at Willis UK & Ireland commented: “Abundant capacity should ensure that premiums remain competitive for property and casualty business and we expect these conditions to continue through to 2012.”
135 Airmic members took part in the survey in March. The questions were extended since the last one to enable more detailed findings. The main ones are listed below.
• Multi-national master policies are the most commonly used cover among Airmic members
• While geographically diverse organisations tend to purchase more local policies, practices are not uniform
• 64% percent of the respondents estimate their total PD/BI values at in excess of £1 billion
• 74% of Airmic members who participated in the survey purchase limits of more than £100 million PD/BI insurance cover - compared to 67% in 2009
• A majority of the survey participants reported paying total PD/BI premiums of more than £1 million
• While a large number of the respondents reported no change in their PD/BI premium at the last renewal there were more decreases than increases
• Captive insurance companies continue to be important risk financing tools for PD/BI insurance
• Over 40% of the respondents see Pool Re as expensive, while almost a similar number believe it to be relevant and worthwhile
• 27% of the respondents say that PD/BI claims frequency has increased within the past two years, while a quarter say that claims costs have increased
• Half the respondents stated that they updated their business continuity plans in the past two years, while a fifth produced a new business continuity plan
• Almost 50% of the respondents think PD/BI insurance rates will increase over the next two years