Total cost of risk declines for fourth year straight: RIMS
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The average total cost of risk trended lower for the fourth year in a row, the Risk & Insurance Management Society Inc. said Tuesday, despite record-setting natural catastrophes.
The 2018 RIMS Benchmark Survey found that total cost of risk, or TCOR, dropped 3% to $9.75 per $1,000 of revenue in 2017 from $10.07 per $1,000 of revenue in 2016.
The marginal decline was driven by decreases in property, liability, workers compensation, management liability and professional liability premium costs, and overall risk management administration costs, RIMS said in a statement.
Risk management pioneer Douglas Barlow defined the cost of risk as the sum of insurance premiums, self-funded losses, risk control expenditures, and internal and external administrative costs, RIMS said.
The annual survey, produced with Advisen Ltd., a New York-based insurance data and analytics company, tracks changes in insurance policy renewal prices as reported by North American corporate risk managers.
The survey found that an 8% drop in liability cost was a significant driver of the lower TCOR, RIMS said. The percentage of companies buying cyber insurance has increased from 35% in 2011 to 65% in 2017.
TCOR per $1,000 of revenue fell for most industries, but increased in 2017 for health care, government and nonprofit, information technology and consumer staples.
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