Total Cost of Risk Dips in 2010

Administrative costs are up, but overall decline reflects still soft premiums, RIMS says.

Although the cost of administering corporate risk management programs rose about 4% last year, the average total cost of risk, which includes insurance costs and retained losses, declined about 3% in 2010, according to the Risk and Insurance Management Society (RIMS). That’s in line with the 3.1% drop in the total cost of risk that RIMS reported for 2009.

“Since 2004, the total cost of risk has been falling pretty steadily,” says David Bradford, executive vice president at Advisen, which conducts the survey for RIMS. That’s because insurance costs, which are the biggest component for most companies, have been declining, Bradford says.


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