Two key factors account for restrained RRG premium growth–the prolonged soft market and U.S. economic conditions. The soft market has been challenging for RRGs in all business areas, and has also slowed formation of new RRGs.

Those RRGs in property development and manufacturing and commerce have been particularly challenged. The subprime crisis has hit contractors and homebuilders RRGs in particular, resulting in a loss of insureds and premium. Higher fuel costs and a decrease in car sales have impacted RRGs in extended service contracts, and to some extent, trucking RRGs.

Notwithstanding these factors, RRGs continue to remain competitive and able to attract new members, even in today's soft market. In last year's survey, based on RRG estimates, 2007 premium was projected to increase by 2.9 percent to $2.72 billion. Actual 2007 results failed to reach projected levels, decreasing by 3.0 percent.

In this year's survey, based on RRG estimates, we project modest premium growth of 2.5 percent, with half the business areas projecting increased premium and half projecting decreased premium.

Both this year's survey and last year's were conducted in soft markets. It will be interesting to compare 2008 projections with actual results in next year's survey, to see whether RRGs were being overly pessimistic or optimistic about the impact of the continued soft market on premium growth.

Another factor that will come into play is the impact the global financial crisis will have on RRG premium growth. At the time the survey was conducted, the Dow had not plummeted to its lowest level in five years, as it did on Oct. 9.

Given the uncertainty in the U.S. economy, it is difficult to predict whether the market will be pushed into an even softer position or if insurers will begin to raise rates–which typically results in commercial insureds seeking alternatives, including RRGs. Only time will tell.