Risk managers say the soft market is now at an end as the losses of the year start to bite in the primary renewals according to the US risk management society RIMS.
A lack of substantive change in average renewal premiums for three of four lines tracked by the RIMS Benchmark Survey™ in the second quarter suggests that the soft commercial lines insurance market may be close to its bottom, it said.
General liability, property and workers’ compensation all fell by less than 1 percent on average, while directors & officers liability policies renewed 4.5 percent lower. The survey, which is administered by Advisen Ltd., tracks changes in policy renewals as reported by risk managers.
“Insurance buyers continue to benefit from a competitive insurance market, but the situation could change quickly,” says Frederick Savage, FCII, ARM, RIMS Board of Directors. “Hurricane season is underway in the US and forecasters continue to call for above-average activity. 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”
Record-shattering tornado losses in the US, combined with losses from the Japanese earthquake and tsunami, floods in Australia and earthquakes in New Zealand, battered insurance carrier results through the first half of 2011, but the impact has not been sufficient to trigger widespread premium increases outside some of the affected areas. Additional catastrophes, however, could spark higher rates for property and possibly other lines of insurance.
“Pricing has been fairly stable in three of the last four quarters, but it is too early to declare the soft market over,” says Dave Bradford, Advisenexecutive vice president and editor-in-chief of the survey. “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 & casualty insurance market remains well capitalized, and the current sluggish economy could make it difficult for underwriters to push through rate increases.”