While the storm clouds of the economic crisis have begun to part, the rays of sunlight peaking through for insurers are few and far between. Profits have sharply declined, and billions have been wiped from their balance sheets, but insurers continue to renew commercial property/casualty insurance programs at deeply depressed rates, according to the recent RIMS Benchmark Survey that tracks changes in insurance policy renewal prices as reported by North American corporate risk managers. Commercial insurance buyers are benefiting from low prices due in part to the global recession, which has suppressed demand for insurance capacity, prompting underwriters to compete for diminishing premium dollars, the survey says.

“Insurers have bounced back from the worst first quarter on record, but their results are still pretty grim and underwriters feel pressured to keep prices low to hold on to the remaining premium dollars.” says Dave Bradford, EVP of Advisen Ltd., which administered the survey. “Carriers are posting underwriting losses, but in this recession, they have found it nearly impossible to push through rate increases except in a few especially distressed areas.”

The survey goes on to note how property insurance policies renewed in the third quarter with essentially no change in average premium. Directors and officers liability (D&O) policies also renewed with no change in average premium, although the D&O market remains divided between the financial institution segment, which was pummeled by the subprime mortgage market meltdown and has seen premiums rise, and the rest of the market, which still is seeing premiums drift lower.

The average general liability premium fell 3.7%, and the average workers’ compensation premium was down 4.5%. Contributing to lower general liability and workers compensation average premiums were declining sales and payrolls, which are used to calculate premiums.

“It’s still a buyer’s market, and it looks as if it may stay that way for a while,” says Daniel Kugler, ARM, CEBS, CPCU, AIC, ACI, member of RIMS board of directors and assistant treasurer, risk management, at Snap-on Inc. “Under normal circumstances, premiums should be rising by now. But many companies are buying less insurance, and underwriters feel pressured to keep prices low to hold on to the remaining premium dollars.”

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