July 29, 2015
Stable market shows slight decrease after three years of increases
New York, NY--In a relatively stable insurance market, businesses paid nearly one per cent (.99 per cent) less in 2014 than they did in 2013 to cover the total cost of risk (TCOR) after three consecutive years of increases, according to the '2015 RIMS Benchmark Survey'.
TCOR is the cost of insurance, plus the costs of the losses that are retained, and the administrative costs of the risk management department.
Key findings from this year’s RIMS Benchmark Survey:
Management liability, workers compensation, liability, and property costs declined.
Average TCOR fell one per cent from $10.90 per $1,000 of revenue in 2013 to $10.80 in 2014.
Risk management administration costs dropped five per cent as costs for both outside services and risk management department declined.
The annual RIMS survey, produced with Advisen Ltd., is a single source of benchmark statistics with industry data for more than 52,000 insurance programs from almost 1,500 organizations – including the programs of 249 Fortune 500 companies. It tracks changes in insurance policy renewal prices as reported by North American corporate risk managers.
“The 2014 survey results reflect the overall stability of the U.S. property/casualty market. One notable driver is the increasing role of alternative capital in assisting reinsurers to deal with economic uncertainties. A related factor is the rising importance of predictive models among insurers not only in the area of property, but also for cyber and casualty,” Jim Blinn, executive vice-president and global product manager at Advisen, said.
Commenting on what the industry expects in the second half of 2015, Blinn said commercial property/casualty insurers are beginning to see a softening market. “ We are looking at a period of rate decreases in insurance premiums owing to rising competition in the market and more than enough available capacity.”