Risk managers continue to enjoy favorable insurance prices, but brokers struggle with declining revenues, says RIMS benchmark survey.
Commercial insurance buyers saw premiums continue to tumble in the fourth quarter, with few signs that that the soft phase is near its end, according to a survey.
Directors and officers liability (D&O), general liability and workers compensation all posted decreases in average premium, while property once again held steady, said the Risk and Insurance Management Society (RIMS) Benchmark Survey.
Workers’ compensation and general liability saw the largest decreases, with average declines in renewal premiums of 5.5 % and 5.0 % respectively. Average D&O premium fell 2.8 %, and property was essentially unchanged, falling less than half of a percentage point.
RIMS said it expects to see this trend continue well into 2010.
“Capacity is abundant in almost every line of insurance. As things now stand, there is little reason to expect commercial insurance prices to increase in the near future. More likely, they will fall yet further,” said Daniel Kugler, a member of RIMS and assistant treasurer, risk management, at Snap-on, Inc.
“While market conditions are benefiting insurance buyers, they are contributing to growing financial stress on brokers, which derive much of their income from commissions on insurance premiums,” said RIMS in a statement.
“Not only is commission income down because of falling rates, the global recession has cut into insurance premium volume as companies downsize or go out of business. Insurance companies also are suffering from lower premium volume, but the impact is lessened by income from invested assets and by favorable claims experience due to the fact that no major natural catastrophes occurred in the US in 2009,” added the association.
The US property & casualty insurance industry posted a 4.5 % return on average surplus for the first nine months, rebounding from a negative rate of return in the first quarter, according to the Insurance Information Institute.
The survey tracks changes in insurance policy renewal prices as reported by North American corporate risk managers.