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Member, Beacon International Group, Ltd.
Average renewal premiums for several lines of property/casualty insurance decreased during the first quarter this year, according to the RIMS Benchmark Survey released Monday.
Property insurance posted the largest decrease, falling 4.2% on average for policies renewing during the first quarter. The average workers compensation premium fell 3.2% and the average directors and officers liability premium dropped 2.3%. Only general liability did not record a material decrease, dropping 0.8%.
That’s in marked contrast with conditions reported for the fourth quarter of last year, in which only D&O coverage recorded a material decline, according to the Risk & Insurance Management Society Inc.
“Risk managers tell us that insurers are more willing to walk away from underpriced business, and the numbers from the past couple of quarters seemed to show resolve to not let premiums fall further,” Dave Bradford, editor-in-chief of the survey and executive vp at Advisen Ltd., the New York-based consultant that administers the survey for RIMS, said in a statement discussing the survey results.
“But capacity, as measured by policyholder surplus, is at an all-time high in the U.S. property and casualty market,” Mr. Bradford said. “That puts a lot of pressure on premiums, and we saw them slip a bit in the quarter.”
“The earthquakes in New Zealand and Japan are reminders as to how vulnerable the U.S. is to devastating catastrophes,” Frederick Savage, a member of RIMS board of directors, said in the statement. “A big earthquake or hurricane could cause premiums across the board to change dramatically. It is still relatively early on in the year with the Gulf of Mexico hurricane season still to come; but barring a large catastrophe, 2011 looks to be another year of competitive pricing. There certainly is no shortage of capacity in most lines.”
Although soft market conditions continued for most lines of coverage in the third quarter of 2010, reductions in average premiums slowed for general liability and workers compensation insurance, according to a survey released Wednesday by the Risk & Insurance Management Society Inc.