Insurance

Insurance Driving Up Total Cost of Risk for Businesses

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Businesses and organizations paid nearly two percent more in 2018 than they did in 2017 to cover the total cost of risk.

Reversing the trend of falling average TCOR per $1,000 of revenue seen from 2013 to 2017, average TCOR rose from $9.75 per $1,000 of revenue in 2017 to $9.95 in 2018, according to the 2019 Risk & Insurance Management Society (RIMS) Benchmark Survey.The marginal increase in TCOR was driven primarily by slightly higher liability, property and workers’ compensation costs

Liability costs, the largest component of TCOR, increased by nearly two percent, while total property costs, the second largest component, was up five percent. Worker’s compensation costs, the third largest component, also rose three percent from $2.64 to $2.72 per $1,000 of revenue.

Higher risk management department costs also pulled average TCOR slightly upward.

Other findings of the 2019 RIMS Benchmark Survey are:

The P/C industry had a profitable 2018;
For casualty lines, higher TCOR is in part a response to a higher frequency of very large losses;
Property TCOR rose despite a significant decrease in catastrophe losses in 2018;
Cyber insurance remains a major success story for insurers as it continues to grow faster than the overall P/C market.
David Bradford, chief strategy officer and director of Strategic Partnership Development of Advisen, commented that while some classes of insurance experienced rate increases, the P/C industry kept rate hikes in most lines – and therefore increases in TCOR – in check.

He said that some insurers are “trimming capacity in troubled lines, but overall the P/C industry is very well-capitalized and able to assume more risk on its balance sheet.” In addition, he suggested that the current environment for insurers may be one “where rate increases may be in conflict with a desire to remain competitive and to increase writings to put excess capacity to work.”

 

 

Source:- insurancejournal