The survey also indicated that “we have only got the one linefiduciarywith any substantive increases continuing quarter to quarter.” The next question, he added, is “how bad is fiduciary going to get?”

Mr. Mandel said that the decline in premium prices is probably less a function of risk managers diligence in lowering their exposures as the fact that the “industry extracted so much from the buyer in the prior two years that, notwithstanding the fact that the industry claims it had a multiyear record of losses on the [directors and officers liability] line, they should have made up for that lost ground to some degree.”

He added that insurers have “gotten the premiums in the past two years that they said they needed and are able to do business on a more moderated basis knowing that the competition is still there.”

Can buyers take a breather now? “Thats always risky to do,” he said. “Diligence in this regard is more important than ever, regardless of whats happening with prices. Your best operating mode, whether its D&O or otherwise, is to put your best foot forward. And that has meant working hard to sell your risk to the marketplace.”

He said that risk managers may now be able to do this job a little more easily and quickly, but the challenge is to convince management “of what kind of price change is acceptable and if the best deal is available” in light of the market. With the continuing difficulties conducting business in America, “I dont think you can really rest on your laurels,” he added.

The purpose of the online survey, he noted, is to help insurance buyers stay ahead of the curve, knowing where the market is headed so that they can budget for future insurance premiums. “Having this contemporary information available regularly is really beneficial,” he said. Previously, the benchmark survey was a once-a-year report.

The fourth-quarter renewal information was summarized by Advisen Ltd. for RIMS.

The survey found that leading indicators in the market, such as policy countsthe number of policies required to complete a desired level of insurance coveragesuggest excess liability and D&O premiums may be the next lines to experience pricing declines.

These developments reinforce mounting evidence that the overall commercial insurance market, which had been weathering price increases since 2000, is calming and the hard market of the past few years is moderating, the RIMS study concluded.

Premiums for property insurance decreased by 8.8 percent, while the size of limits declined by 4.4 percent, RIMS reported.

Other premiums continued to rise, but the rate of those increases slowed dramatically in some cases. For example, for D&O, where increases neared 200 percent in 2003, the rate of increase slowed from 75 percent in the third quarter to just 17 percent in the past quarter, according to the survey. Excess liability experienced similar slowdowns in increases, dropping from about 60 percent over the summer to just 12.4 percent last fall.

Fiduciary liability was found to be the one remaining major line where premium increases continue to rise significantly on an annual basis, although the rate of increase quarter to quarter remains steady.

According to the survey, annualized rates were up about 67 percent compared to 2002. The most recent quarters increases are similar to the 66 percent and 68 percent increases experienced in the first and second quarters of 2003, so while fiduciary rates continue to rise significantly, the rate of the increases over the year has been relatively consistent.

“The entire industry has intuitively known that the market is softening, and now we have the first statistical evidence that gives us the cold, hard factthe market is turning,” Advisen CEO Thomas P. Ruggieri said in a statement.

Last quarter, the RIMS Benchmark Survey reported declines in property insurance policy counts, and this quarter prices in property premiums declined, suggesting that policy count figures may presage premium cost trends, according to the study.

This quarter, policy counts also declined for excess liability and were flat for D&O. Both policy counts and the small increases or declines in rates suggest that even though the costs of some coverage continue to rise, supply is catching up to, or has caught and surpassed demand, creating greater equilibrium in the market compared to previous quarters, the survey found.

“We cant predict what the market will do, but given past performance where slowdowns in rate increases, coupled with declines in policy counts, eventually amounted to declines in premiums, there are indications that excess liability and D&O could be in for changes in the coming months,” Mr. Ruggieri said.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.