Hard market conditions forced up the cost of risk last year, according to the Risk and Insurance Management Society (RIMS) Benchmark Survey.

The average total cost of risk increased 5% to $10.70 per $1000 of revenue from $10.19 per $1000 of revenue, the study shows.

This compares with a rise of 1.7% in 2011.

Property premiums’ contribution to average total cost of risk grew nearly 6% to $3.09 per $1000 of revenue from $2.92 per $1000 of revenue.

The annual survey, produced with researcher Advisen, provides benchmark statistics from industry data for 52,000 insurance programs.

“While 2012 experienced a reduction in insured catastrophe losses, insurers continued to implement rate increases through the year,” survey Executive Editor Jim Blinn said.

Pressure on underwriting results and low interest rates were motivating factors, he says.

However, RIMS director Michael Phillipus says research shows rising rates attract new capacity, which “makes it difficult to sustain the trend towards progressively higher rates”.