Excluding financial services firms D&O policies renewed with an average 4.1% decrease, new figures show
Despite poor financial results, insurance companies continued to compete vigorously for business in the second quarter, according to new figures from the US.
The figures suggested that the insurance market remains competitive despite insurance capacity disappearing. Rates continued to drift downward despite the loss of $81bn in policyholders’ surplus in 2008 and the first quarter of 2009.
According to the figures, general liability and workers’ compensation policies both posted average decreases in renewal premiums. Directors and officers liability (D&O) policies renewed at higher premiums on average. This increase was probably the result of the extremely high rates for financial sector companies. Property policies renewed at essentially no change.
Daniel Kugler, member of RIMS board of directors and assistant treasurer, risk management, at Snap-on, Inc, commented: ‘The soft market appears to be winding down, but except for increases already taking place in some financial segments, there are no strong signals that rates will rebound sharply in the near future.’
The RIMS benchmarking survey found that:
Workers’ compensation recorded a 2.8% average decrease in renewal premiums, as compared to a 1.7 % drop in the second quarter of 2008.
“There are no strong signals that rates will rebound sharply in the near future.
Daniel Kugler, member of RIMS board of directors
General liability posted a 1.1 % drop as compared to nearly a 5 % decline a year ago.
D&O increased 2.9 %, a reversal of the 6.4 % average decrease in the second quarter of 2008.
Interestingly, excluding financial services companies, D&O policies renewed with a 4.1 % average decrease.
Property premiums fell less than 1 %, which compares to a 6.1 % drop in the second quarter of 2008.
Dave Bradford, executive vice president of Advisen and editor-in-chief of RIMS Benchmark Survey: ‘The demand for insurance capacity also has decreased, which has kept pressure on rates. Companies are downsizing, which means that there is simply less to insure.’
Advisen also warned that the figures suggest the market is close to its bottom.