three-fourths of the agents and brokers reporting that renewal premiums forI'd like to see how a broker could be taken seriously using data so imprecise. See www.rims.org/benchmark for precision.
their small and medium accounts were down 1-20 percent compared with fourth
quarter 2007.
Wednesday, 23 April 2008
Return of the Anecdotal Jedi
Just as I had posted about the significance of empirical data in analyzing premium rate trends in the commercial insurance marketplace, CIAB comes out with an announcement that proves my point clearly. See here for coverage including the following:
Thursday, 17 April 2008
Empirical strikes back
A lot of one, one of the other.
Many journalists are running stories on the soft market and are using surveys as the base of their articles. There are two types of surveys data: anecdotal and empirical. There are a lot of anecdotal surveys while the RIMS Benchmark Survey produced by Advisen is the only one based on empirical data.
Today we announce the publication of the 2008 RIMS Benchmark Survey book which details the 2007 buying year for Risk Managers in North America (get your copy here). Just as our quarterly results showed, the soft market gained momentum across the board, including falling property rates for the first time since the 2005 hurricanes.
The annual book goes deeper than premiums and analyzes the total cost of risk (TCOR) including the retained losses and the expense of risk administration (salaries, etc.).
Anecdotal data comes from questions of brokers such as "do you think rates will continue to fall?" or "will they fall between 5 and 10%?" Instead, Advisen collects data right from risk managers on their buying of all commercial lines insurance coverages and with over 1,000 corporations reporting in 2007, the data set is the largest available.
While the overall picture is of a free-fall in premiums, this amount of benchmarking data enables comparison by industry, size of company, and other combinations to find any aberrations. For instance, changes in TCOR were not evenly distributed across industries and the book lists 14 industry groups for peer comparison.
Importantly, we also include the first installment of an annual survey about broker compensation. Risk managers provide a clear indication of how they compensate their brokers (general fee / placement commission); how much they compensate their brokers; broker market share by product; which services are currently included in their fees and which additional services risk managers would like to buy from their brokers.
It's an incredible benchmarking tool for corporate risk managers to demonstrate their relative sophistication in insuring their risk as well a road map for brokers to develop additional products and services for clients and prospects.
To buy your copy of the RIMS Benchmark Survey book including the full results of the broker survey click here. Discounts apply to RIMS members.
Many journalists are running stories on the soft market and are using surveys as the base of their articles. There are two types of surveys data: anecdotal and empirical. There are a lot of anecdotal surveys while the RIMS Benchmark Survey produced by Advisen is the only one based on empirical data.
Today we announce the publication of the 2008 RIMS Benchmark Survey book which details the 2007 buying year for Risk Managers in North America (get your copy here). Just as our quarterly results showed, the soft market gained momentum across the board, including falling property rates for the first time since the 2005 hurricanes.
The annual book goes deeper than premiums and analyzes the total cost of risk (TCOR) including the retained losses and the expense of risk administration (salaries, etc.).
Anecdotal data comes from questions of brokers such as "do you think rates will continue to fall?" or "will they fall between 5 and 10%?" Instead, Advisen collects data right from risk managers on their buying of all commercial lines insurance coverages and with over 1,000 corporations reporting in 2007, the data set is the largest available.
While the overall picture is of a free-fall in premiums, this amount of benchmarking data enables comparison by industry, size of company, and other combinations to find any aberrations. For instance, changes in TCOR were not evenly distributed across industries and the book lists 14 industry groups for peer comparison.
Importantly, we also include the first installment of an annual survey about broker compensation. Risk managers provide a clear indication of how they compensate their brokers (general fee / placement commission); how much they compensate their brokers; broker market share by product; which services are currently included in their fees and which additional services risk managers would like to buy from their brokers.
It's an incredible benchmarking tool for corporate risk managers to demonstrate their relative sophistication in insuring their risk as well a road map for brokers to develop additional products and services for clients and prospects.
To buy your copy of the RIMS Benchmark Survey book including the full results of the broker survey click here. Discounts apply to RIMS members.
Tuesday, 15 April 2008
Subprime propaganda
Greg Flood is on a concerted campaign to reverse the soft market. Today Advisen Front Page News carried an article by AM Best in which the Ironshore underwriter explains the magnitude of the claims from subprime on the D&O and E&O markets. See the story here.
Last week Greg was quoted in Post magazine (story here) talking about how he sees insured loss from subprime surpassing $8b.
IronPro is new to the market, is well-rated, and doesn't have legacy subprime exposure to force high reserves. In other words, Greg has been sitting on the sidelines waiting for the right time and apparently he believes the time is now:
Chalk this up as another indicator of the bottom, the end of the soft market, at least for the specific buying of D&O and E&O for Financial Institutions. Greg says his competitors are seeing 30-40% increases in D&O and he wants in. Data from the RIMS Benchmark Survey and from retail and wholesale brokers do not show this type of increase, but we won't be surprised if the next batch of renewals did.
Last week Greg was quoted in Post magazine (story here) talking about how he sees insured loss from subprime surpassing $8b.
IronPro is new to the market, is well-rated, and doesn't have legacy subprime exposure to force high reserves. In other words, Greg has been sitting on the sidelines waiting for the right time and apparently he believes the time is now:
“We’re taking excess layers that are very high. We’re looking to reestablish
insurance for companies that are looking to get it.”
Chalk this up as another indicator of the bottom, the end of the soft market, at least for the specific buying of D&O and E&O for Financial Institutions. Greg says his competitors are seeing 30-40% increases in D&O and he wants in. Data from the RIMS Benchmark Survey and from retail and wholesale brokers do not show this type of increase, but we won't be surprised if the next batch of renewals did.
Thursday, 10 April 2008
Subprime Updates
Fitch published an estimate of $3-4b in D&O losses from subprime. See press coverage here. Echoing what Advisen published long ago and agreeing with Advisen's stated opinion that losses will be felt by a handful of large underwriters, Fitch said they didn't see a change in overall premium rates.
I have written about the imbalance of broad market supply and demand (here) as too great for even several multiples of the $3.6b estimate insured loss. Next up for Advisen is update this estimate and to include Errors & Omissions losses.
Meanwhile back at the plaintiffs bar ranch, Advisen is tracking 269 subprime and credit crisis-related lawsuits, of which 62 are Securities Class Actions used in modelling insured D&O losses. This count continues to climb.
I have written about the imbalance of broad market supply and demand (here) as too great for even several multiples of the $3.6b estimate insured loss. Next up for Advisen is update this estimate and to include Errors & Omissions losses.
Meanwhile back at the plaintiffs bar ranch, Advisen is tracking 269 subprime and credit crisis-related lawsuits, of which 62 are Securities Class Actions used in modelling insured D&O losses. This count continues to climb.
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