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RIMS: Insurance Costs Fall as Capacity Expands

Corporate risk managers enjoyed another year of soft market conditions in 2005 and the market shows no signs of hardening any time soon, according to...
May 31, 2006

Corporate risk managers enjoyed another year of soft market conditions in 2005 and the market shows no signs of hardening any time soon, according to the RIMS Benchmark Survey, produced by Advisen Ltd. for the Risk & Insurance Management Society Inc. in New York. The survey found that despite unprecedented catastrophe losses in 2005, the median total cost of risk was down for the first time since 2001 and was due almost entirely to lower insurance costs.  The results show that despite an estimated $58 billion in insured losses from hurricanes Katrina, Rita and Wilma, policyholder surplus rose in 2005 and the abundant underwriting capacity increased competition and lowered insurance costs. As a result, the median total cost of risk fell about 11 percent in 2005, the survey said.  "While the effects of these hurricanes will be felt by people of the Gulf Coast region for years to come, their impact on the overall insurance market is much less dramatic and long-lasting," David Bradford, editor-in-chief of Advisen, said in a statement.

Insurance Costs Fall As Capacity Expands (Business Insurance 5/25/06)

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