November 5, 2003 by Canadian Underwriter
The latest “benchmark survey” released by the Risk and Insurance Management Society (RIMS) suggests that the pace of price increases in the U.S. commercial insurance marketplace slowed dramatically in the third quarter of this year. “After the staggering increases [in pricing] we have seen in recent quarters, especially from professional liability lines, the market for many lines appears to be moderatingIt’s too early to say it definitely, but the hard market appears to be ebbing,” says RIMS vice president Christopher Mandel.
Price stability was particularly evident in property insurance, fiduciary liability coverage and director’ and officers’ (D&O) liability. These lines of business had experienced “astronomic” price hikes in the past, the survey observes. Business lines which continued to attract hefty rate increases in the third quarter of this year include excess liability and workers’ compensation. Premium renewals in all the classes of business mentioned above rose year-on-year by between 3% to 32% during the third quarter, the survey indicates. Notably, these same lines attracted upward rate adjustments as high as 250% during the spring of this year.
The RIMS survey also suggests that the market’s average retention level rose from 8% to 25% in the third quarter of this year, with fiduciary coverage showing a significantly higher level of about 250%. “This suggests insurers are pushing retentions higher to reduce loss ratiosunderwriters are clearly signaling a growing unwillingness to participate in risk sharing at previous levels of risk transfer,” the survey notes.