Risk managers expect to see Casualty rates rise

Rates remain flat according to the latest Airmic Casualty survey (download), but most risk managers expect to see increases in the next two years.

Buyers reported that, on a like-for-like basis, prices were slightly more likely to have gone down at the latest renewal than up. 40% of respondents had seen no change in premium, 34% had seen a drop and 26% an increase.

Airmic members reported that there was plenty of capacity in the market, with little difficulty in obtaining good security and flexible terms. Nearly 90% of respondent organisations require at least AM Best A- (Excellent) or equivalent security from their Casualty insurers.

Looking ahead, however, most expect the market to change. 61% of respondents thought that rates are going to go up over the next two years with only 17% expecting a reduction.

Companies in the pharmaceutical, food and drink, defence and energy industries are all among the biggest spenders on this type of insurance.

“These results confirm the picture painted by earlier benchmark surveys in other classes that the high level of losses paid by insurers during 2011 have not fed through into higher premiums. It remains a favourable market for buyers,” said Airmic technical director Paul Hopkin.

The report was sponsored by AIG.

Lisa Williams UK Head of Casualty for AIG commented, “I found some of the other concerns expressed by risk managers very interesting. For instance29% of insureds are not being properly informed about the insurer’s value proposition.  This means that their ability to choose between insurers does not account for added value services that might protect them or reduce the risks they are insuring against.”

More member education needed

A third of risk managers do not maintain records of data assembled during the insurance buying process, according to the report. “This is unquestionably an area where Airmic should be doing more to educate its members. It is something that goes to the heart of claims certainty,” commented insurance steering group chair and association deputy chair Chris McGloin.

Click here to read Chris McGloin’s commentary on the findings

Casualty Benchmarking Report

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