Premiums fall in North America
Property insurance rose but all other classes of cover fell in the latest survey on insurance trends in North America by the Risk and Insurance Management Society (RIMS).
The 2006 RIMS benchmark survey, based on responses by 1200 corporate risk managers in the US and Canada, found property insurance rates rose 0.8% from the fourth quarter of 2006 to the first quarter of 2007.
The rest of the market continued to soften, with directors’ and officers’ indemnity falling 7.7%, workers’ compensation down 3.8% and general liability down 0.8%. Rates for the entire risk market in North America were down 9.2%.
David Bradford, editor-in-chief of survey producer Advisen, says the market is being driven by simple fundamentals. “Falling insurance costs continue to be driven by rapidly accumulating policyholders’ surplus – the measure of ‘supply’ in the insurance ‘supply and demand’ equation.
“The insurance industry recorded a profit in 2005 in spite of record catastrophe losses, which further fuelled competition in 2006, leading to a sharp decrease in the total cost of risk.”
Mr Bradford says that without unusually severe natural catastrophe losses, “accumulating surplus should continue to exert downward pressure on insurance costs in 2007”.
The 2006 RIMS benchmark survey, based on responses by 1200 corporate risk managers in the US and Canada, found property insurance rates rose 0.8% from the fourth quarter of 2006 to the first quarter of 2007.
The rest of the market continued to soften, with directors’ and officers’ indemnity falling 7.7%, workers’ compensation down 3.8% and general liability down 0.8%. Rates for the entire risk market in North America were down 9.2%.
David Bradford, editor-in-chief of survey producer Advisen, says the market is being driven by simple fundamentals. “Falling insurance costs continue to be driven by rapidly accumulating policyholders’ surplus – the measure of ‘supply’ in the insurance ‘supply and demand’ equation.
“The insurance industry recorded a profit in 2005 in spite of record catastrophe losses, which further fuelled competition in 2006, leading to a sharp decrease in the total cost of risk.”
Mr Bradford says that without unusually severe natural catastrophe losses, “accumulating surplus should continue to exert downward pressure on insurance costs in 2007”.