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RIMS survey suggests soft commercial market near bottom

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Slight decreases in average renewal premiums in the second quarter of 2011 for several lines within the commercial insurance market suggest that the soft market may be near bottom, according to the RIMS Benchmark Survey released Thursday.

The survey, administered by New York-based Advisen Ltd., found that general liability, property and workers compensation premiums fell less than 1%, with directors and officers liability policies posting the largest decrease of 4.5% in the second quarter, the New York-based Risk & Insurance Management Society Inc. said in a statement.

“Pricing has been fairly stable in three of the last four quarters, but it is too early to declare the soft market over,” Dave Bradford, executive vp at Advisen and editor-in-chief of the survey, said in the statement. “Rates may have stabilized for now, but barring major catastrophe losses, there are few signs of materially higher premiums on the horizon. The commercial property and casualty insurance market remains well-capitalized, and the current sluggish economy could make it difficult for underwriters to push through rate increases.”

Cat losses not enough to increase premiums

While tornado losses in the United States—combined with losses from the tsunami and earthquake in Japan and floods in Australia—“battered” insurers’ financial results in the first six months of 2011, the impact has not been large enough to spark premium increases beyond specific affected areas, RIMS said in the statement.

“Insurance buyers continue to benefit from a competitive insurance market, but the situation could change quickly,” said Frederick Savage, director of risk management for Chevron Corp. in San Ramon, Calif., and RIMS board director, said in the statement. “One or two very large storms on top of the catastrophe losses in the first half of the year could be enough to spark higher premiums, at least for property risks,” he said.

The survey is based on information provided by risk managers and is available for purchase at www.RIMS.org/benchmark.