RIMS survey shows long-term change in commercial insurance market

The annual edition of the Risk and Insurance Management Society (RIMS) Benchmark Survey shows that while the hard market is waning, commercial insurance buyers are anticipating a new kind of market with more diverse risk transfer options and the potential for shorter market turns.
In its survey of almost 1,000 companies in the U.S. and Canada, RIMS finds that the market is indeed recovering from September 11, Enron and other forces that turned the market on its ear in recent years. Trends in 2003 include the rise of the Bermuda market as a viable force and growth in alternative risk transfer (ART) options. Today’s commercial insurance buyers are learning to be more flexible in their approach to risk transfer and finding new sources of capacity, just a pricing in the traditional insurance market is flattening and even dropping in some cases.
“The market is clearly emerging from the ‘hard’ phase of the cycle, and a wide array of economic, social, psychological and political forces are jockeying to control the overall direction and magnitude of change,” says David Bradford, chief knowledge office at Advisen, which conducts the RIMS study.
Bradford notes that this hard market has had the long-term effect of forcing risk managers to look for new risk transfer and risk management options. “The heightened efficiency of the insurance market and the increased availability of options to traditional insurance likely will translate into insurance cycles that are shorter and shallower,” he says.