In 2010, Dr. Robert Hartwig of the I.I.I. spoke about the state of our industry and when he expected the market to harden. Based on indicators back then, he projected the soft market would begin to ease in 2011 and rates would likely firm by 2012-2014, but not necessarily trigger a traditional hard market.
Here it is the end of 2011 and indeed we have seen that average renewal premiums in three of four lines of business as tracked by the RIMS Benchmark Survey™ increased in the third quarter, strongly suggesting that an eight-year period of falling commercial insurance rates is at its end. According to the RIMS Benchmark Survey™ that tracks changes in average program renewal premiums for director & officers liability, general liability, property and workers’ compensation as reported by risk managers, of the four lines, only D&O posted a decrease, falling 1.9 percent. The average renewal premium increased 1.2 percent in general liability, 1.6 percent in property and 2.1 percent in workers’ compensation. These are modest increases, which reflects what Dr. Hartwig had discussed last late year.
Nonetheless, we are beginning to see the market firming. This is further underscored in Workers Compensation where the NCCI reported that there are 19 state funds that have increased rates or are looking for rate hikes. Private insurers are also following suit. Dr. Robert Hartwig estimated that approximately 25% of all premiums written have evaporated over the past five to six years. Loss of associated payroll, a prolonged soft market, aggressive pricing, the increased popularity of large deductible programs, captives, and self-insurance alternatives have all taken their toll on the Workers Comp market. A shift is now taking place with carriers wanting to turn things around.
With rates rising and premiums set to increase, albeit not in the way they had during the last hard market (after 2001-2002), along with stricter underwriting, looking for competitive markets with strong carriers committed to the niche you serve will be critical. Insurance Programs Of America is strongly positioned to provide the markets needed for our niche agents. We have three distinct divisions that cover the Standard Markets, Surplus Lines, and Programs. Whether you need access to an admitted market, have a complicated risk that requires the surplus lines market, or are focusing on program business for the hospitality industry, IPOASUA will work with you to find cover.