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Excess capital suppresses commercial lines rates in 2010 Q2: RIMS Benchmark Survey


July 21, 2010   by Canadian Underwriter


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Excess capacity in the commercial lines insurance marketplace continued to keep premiums under pressure during 2010 Q2, according to the RIMS Benchmark Survey.
In the survey, administered by Advisen Ltd., risk managers reported decreases in average renewal premium of between 2.5% and 3.8% for property, general liability, directors & officers liability (D&O) and workers’ compensation insurance.
“The soft market is still going strong,” says David K. Bradford, Advisen executive vice president and editor-in-chief of the survey. “Insurance capacity remains abundant in almost every line and, as a result of the recession, demand for that capacity has fallen.
“Unless something happens to wipe out the excess capacity, premiums should continue to drop this year.”
That “something” might just be an active 2010 hurricane season.
“Risk managers continue to benefit from lower premiums, but a big storm could cause the market to turn at any time,” says Robert Cartwright, loss prevention manager for Bridgestone Americas Holding Inc. and a member of the RIMS board of directors. “Forecasts for the 2010 hurricane season are ominous, and a Gulf Coast hurricane could be especially disastrous because of the [Deepwater Horizon] oil spill.
“If catastrophe losses soak up enough capacity, prices could increase for all lines, not just property insurance.”


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