Soft market in commercial lines continues unabated for seventh year: RIMS Benchmark Survey

Now in its seventh year, the soft market shows few signs of loosening its grip on commercial insurance pricing, according to the RIMS Benchmark Survey administered by Advisen Ltd.
Average premiums in every line tracked by the survey fell in the first quarter. However, forecasts for an above-average hurricane season may signal rising premiums on the horizon.
“Insurance capacity is abundant throughout the commercial lines market, but the lingering impact of the global recession has reduced the demand for that capacity,” said Dave Bradford, Advisen executive vice president. “Abundant capacity coupled with diminished demand keeps downward pressure on rates.
“As things now stand, insurance buyers can anticipate another year of favorable insurance prices, although catastrophe claims always are a wild card in the pricing cycle.”
General liability was once again the most competitive line during the quarter, with the average premium falling 4.4%. The average property premium, which had been essentially flat over the past several quarters, fell 2.9%.
Average directors and officers liability (D&O) premium was off 1.1%. D&O average premium had been flat to slightly higher throughout 2009 due to rate increases in the financial institution sector, but those increases now have abated, Advisen observed.
Overall, commercial “rate levels are down, but insurers nonetheless posted good results in 2009,” said Robert Cartwright, loss prevention manager for Bridgestone Americas Holding Inc. and a member of the RIMS board of directors.  “As a result, underwriters have not been highly motivated to push for higher premiums.
“That certainly is good news for risk managers. Forecasters are calling for an active hurricane season this year, though. Large catastrophe losses could cause prices to increase across the board.”
 Colorado State University hurricane forecasters are calling for 15 named storms, eight hurricanes and four major hurricanes in 2010.