All it would take, says a property-casualty insurance expert, is one big storm to end the soft market. Otherwise, risk managers can expect the soft market to continue indefinitely, according to RIMS.

David Bradford

“Risk managers continue to benefit from lower premiums, but a big storm could cause the market to turn at any time,” said Robert Cartwright, loss prevention manager for Bridgestone Americas Holding and a member of the RIMS board of directors.

Excess capacity in the commercial lines insurance marketplace continued to keep premiums under pressure during the second quarter, according to the RIMS Benchmark Survey, administered by Advisen Ltd. Risk managers reported decreases in average renewal premium of between 2.5% and 3.8% for property, general liability, directors & officers liability (D&O) and workers’ compensation insurance.

With scientists at Colorado State University’s Department of Atmospheric Science predicting 18 named storms this year, with 10 forecast to be hurricanes, and five of those to be major ones, premium prices could rise.

“Forecasts for the 2010 hurricane season are ominous, and a Gulf Coast hurricane could be especially disastrous because of the oil spill,” Cartwright said. “If catastrophe losses soak up enough capacity, prices could increase for all lines, not just property insurance.”

But without a storm, pricing of property-casualty insurance products is expected to remain soft.

“The soft market is still going strong,” says David K. Bradford, Advisen executive vice president and editor-in-chief of the survey. “Insurance capacity remains abundant in almost every line and, as a result of the recession, demand for that capacity has fallen. Unless something happens to wipe out the excess capacity, premiums should continue to drop this year.”

Workers’ compensation saw the largest decrease in average renewal premium during the quarter, falling 3.8%. The average property premium was 3.5% lower, while general liability dropped 2.5%. The average D&O premium, which had been buoyed by rate increases in the financial institution sector in 2008 and 2009, fell throughout the first half of 2010, sliding 3.5% in the second quarter.