Commercial insurance prices remain soft: RIMSPosted On: Jan. 13, 2010 12:00 AM CST
NEW YORK—Commercial insurance prices fell in the fourth quarter of 2009, and the U.S. market is likely to remain soft in 2010, according to a pricing index released Wednesday.
The Risk & Insurance Management Society Inc.’s Benchmark Survey found few signs that the market is close to firming. The survey is administered by New York-based Advisen Ltd.
“The combination of a weak economy, which has suppressed demand for insurance capacity, combined with a very mild year for natural catastrophes, has kept downward pressure on rate levels,” Dave Bradford, executive vp at Advisen and editor in chief of the survey, said in a statement. “Unless very large catastrophe losses soak up excess capacity, we expect to see this trend continue well into 2010.”
Workers compensation renewals saw premiums decrease 5.5% on average, and general liability renewals decreased 5%, the report said. Premiums for directors and officers liability policies declined 2.8% overall, while property premiums fell less than one-half of a percentage point, according to the survey.
Daniel H. Kugler, assistant treasurer-risk management at Snap-on Inc. and a member of RIMS board of directors, said he expects prices to fall further.
“Some risk managers are reporting higher renewal premiums, but overall the market continues to be very favorable for insurance buyers,” he said in the statement.
In addition to declining prices, demand for insurance has decreased as some cash-strapped companies attempt to limit costs and others go out of business, the report said. This means less revenue for insurers and brokers.
The U.S. property/casualty industry posted a 4.5% return on average surplus for the first three quarters of 2009, after posting a negative rate of return in the first quarter of the year, according to the Insurance Information Institute.