Total cost of risk edges higher for third year

The average “total cost of risk” for companies trended higher for the third consecutive year in 2013, according to the newly-released RIMS Benchmark Survey.

The TCOR increased 2% from $10.70 per $1,000 of revenue in 2012 to $10.90 per $1,000 of revenue in 2013, according to RIMS.

The total cost of risk also increased 5% in 2012 and 1.7% in 2011, “reflecting the influence of hardening insurance market conditions,” according to the benchmark report, which includes industry data for more than 52,000 insurance programs from more than 1,400 companies.

The contribution of property premiums to average TCOR also rose nearly 15%, from $3.09 per $1,000 of revenue to $3.54 per $1,000 of revenue, RIMS noted.

“The value of risk management and its impact on an organization’s sustainability has emphasized the importance of developing comprehensive risk financing programs,” RIMS president Carolyn Snow commented in a statement.

“However, the task of developing such programs has become more challenging as programs become more complex. Benchmarking the total cost of risk gives risk managers an undeniable advantage when structuring their risk financing programs, especially in today’s competitive insurance market.”