Due to declines in property and liability costs and overall risk management costs, North American businesses paid 2% less in 2015 than they did in 2014 to cover the total cost of risk (TCOR), according to the 2016 RIMS Benchmark Survey.
The annual RIMS survey, produced with Advisen Ltd., a commercial insurance and risk professional information provider, was released on Thursday. The survey – which includes industry data on more than 52,000 insurance programs from 1,457 organizations – tracks changes in insurance policy renewal prices as reported by North American corporate risk managers. It defines TCOR as the cost of insurance, plus the costs of the losses that are retained, and the administrative costs of the risk management department.
RIMS noted in a statement that the 2016 survey included a first-ever special chapter examining cyber insurance coverage, which found that the total cost of cyber risk for survey respondents was just US$0.38 per US$1,000 of revenue.
Other key findings of this year’s survey:
The 2% drop in TCOR was tempered by increases in some categories – driven by a 25% increase in professional liability costs, with management liability and workers’ compensation costs also rising slightly;
Decreases in insurance premiums have stopped. The survey has shown flat overall premiums at renewal from 2014 to 2015 across most sizes of business and categories of insurance;
Cyber and transactional insurance emerged as growing niche areas, with Advisen predicting that the cyber sector could double in size to US$5 billion by 2020; and
The use of disruptive technologies in the commercial P&C market to power rating models, loss assessment tools, and distribution channels is a considerable force for change in the sector.
“The tremendous growth of cyber risks and insurance options drove us to include a new section analyzing the market for cyber insurance,” explained Jim Blinn, executive vice president and global product manager at Advisen, in the statement. “Risk managers will now have greater insight into the marketplace as well as the practices of their peers in purchasing this important coverage.”