Businesses paid almost 2 percent more to cover the total cost of risk (TCOR) last year than they did in 2017, according to the 2019 Risk and Insurance Management Society (RIMS) Benchmark Survey, produced with Advisen.
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.
RIMS suggested that 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 2 percent, while total property costs, the second largest component, was up 5 percent.
The third-largest component of TCOR, workers compensation costs, experienced a 3 percent increase from $2.64 to $2.72 per $1,000 of revenue.
Higher risk management department costs also pulled average TCOR slightly upward.
The report also found that the property and casualty industry had a profitable 2018. In addition, cyber insurance remains a major success story for insurers as it continues to grow faster than the overall property and casualty market.
David Bradford, chief strategy officer and director of strategic partnership development of Advisen, commented: “The property and casualty insurance industry is well-capitalised, growing, and profitable. While some classes of business experienced rate increases, the robust health of the property and casualty industry helped to keep rate hikes in most lines—and therefore increases in TCOR—in check.”
He added: “Some insurers are trimming capacity in troubled lines, but overall the property and casualty industry is very well-capitalised and able to assume more risk on its balance sheet.”
RIMS vice president Steve Pottle, added: “An effective risk financing programme does much more than just protect assets.”
“Understanding TCOR allows organisations and their risk management professionals to successfully allocate resources and more accurately prepare for fluctuations in the insurance market.”