X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Insurance trends continued the decline in the first quarter of 2007, reflecting the abundance of capital and increased competition between carriers for business, according to the RIMS Benchmark Survey for the first quarter of 2007. Insurers continue to undercut each other in the directors and Officers (D&O) coverage. “D&O rates decreased 7.7% year over year in the current quarter, 5.1% year-over year in the fourth quarter of 2006 and 2.8% year-over-year in third quarter of 2006,” says Dave Bradford, editor in chief of Advisen Ltd., which collects and analyzes RIMS data. “We’re seeing an acceleration of a trend.” Of course, the current rates remain significantly higher than they were at the start of the decade, before all the corporate scandals. Will D&O premiums fall to those low levels? “Anecdotally, beginning in March, we’re starting to see the bottom fall out of the D&O market and rates are on a toboggan right down the hill,” says Bradford, who adds that the insurance industry is awash in capacity and with companies reallocating surplus capital from the catastrophe exposed property business, some of that capital is ending up in the D&O pot. So supply is increasing rapidly. The other factor is that loss factor has improved dramatically. The number of securities class action suits claims against public companies has been slashed in half. “In 2006 there were fewer 114 or 118 class action suits as opposed to an average of 215 over the prior five years,” says Bradford. “No one knows exactly why that is so but Sarbanes-Oxley might actually be doing what it was meant to do in improving transparency and corporate governance.” Workers’ compensation declined by 3.8%; and according to the survey, premiums will continue to fall. Also declining were general liability premiums, which have been on the decline for the past five quarters, although at 0.8%, the decline in the current quarter was a modest one.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.