RIMS’ 2-Q Survey Confirms Softening

The soft market is well on its way, according to the second quarter 2004 Risk and Insurance Management Society (RIMS)/Advisen benchmark survey. The risk manager survey shows half of all commercial accounts saw rate decreases on renewal.

The survey suggests commercial premiums fell by an average 18% during the second quarter, with previously difficult lines such as directors and officers (D&O) and general liability reflecting rate decreases. Declines outpaced rate increases in every major line except workers’ compensation, RIMS notes. D&O rates fell on average by 16%, with more than 61% of renewals either seeing a decrease or remaining flat. Property coverage rates, which fell in previous quarterly surveys, declined further during the second quarter of this year.

On the flipside, half of the workers’ compensation renewals saw increases. “Clearly, when 100 risk managers go into the market and 50 come back with a significantly better priced deal than the one they had last year, that means we are starting to experience a turn in the market from the past several years of large price increases ,” says Daniel Kugler, RIMS’ vice president of membership. “The continued decline in D&O prices affirms that even the highest flier in the past few years is now coming back to earth.”