NEW YORK: Economic turmoil and the second worst year on record for insured natural catastrophe losses did not deter falling commercial insurance prices in 2008, according to the 2009 RIMS Benchmark Survey book, the annual guide to the cost of risk for commercial insureds in North America. Lower average premiums in almost every line of business contributed to a 9.4 per cent drop in average total cost of risk (TCOR) per $US1000 ($1248) of revenue.

The publication enables risk managers to compare their TCOR to similar organisations and benchmark their insurance program limits and retentions based on data collected on more than 1300 companies in the US and Canada. The book is the annual print summary of the online RIMS Benchmark Survey that is updated daily. Data for it was compiled and analysed by Advisen for the Risk and Insurance Management Society (RIMS).

“Risk managers in nearly every industry tracked by the survey saw the average cost of risk fall in 2008,” says 2009 RIMS Benchmark Survey editor-in-chief and Advisen executive vice president, Dave Bradford. “TCOR is the sum of insurance premiums, retained losses and risk management administrative costs. Of those components, lower average insurance premiums most strongly contributed to the drop in TCOR.”

The 2009 book presents findings from two new surveys on enterprise risk management (ERM) and workers’ compensation claims management. The broker services and remuneration survey, which was introduced last year, provides another look into the relationship of commercial insurance buyers and their brokers.

In addition, the broker survey finds that compensating agents on a fee basis results in material savings over commission-based compensation. Meanwhile, the workers’ compensation survey reveals that approximately 60 per cent of companies have moderate to significant deficiencies in workers’ compensation claims management.

“Insurance program benchmarking is vitally important for risk managers,” says RIMS board of directors member Daniel Kugler. “But especially in the current economic environment – where every penny counts – risk managers need more information and better tools to control costs, increase efficiency and assure their organisations have state-of-the-art risk management programs.”