The average total cost of risk, made up of insurance premiums retained losses and risk management administrative costs, fell  9.4 percent per $1,000 of revenue in 2008, according to a survey.

The findings in the annual benchmark survey of Risk and Insurance Management Society came from a poll of over 1,300 U.S and Canadian risk managers.

New York research firm Advisen and RIMS jointly announced the survey results yesterday, which are now published in a book that serves as an annual guide to risk managers in 14 industry groups.

According to Advisen, lower average premiums in almost every line of business contributed to the overall drop in the total cost of risk. 

David Bradford, editor-in-chief of the 2009 RIMS Benchmark Survey book and executive vice president at Advisen reported that risk managers in nearly every industry tracked by the survey saw the average cost of risk fall in 2008.

Daniel H. Kugler, member of RIMS board of directors and assistant treasurer of risk management at Snap-on, Inc., said, “Insurance program benchmarking is vitally important for risk managers [and] especially in the current economic environment—where every penny counts.”

The annual publication, which helps insurance buyers compare premiums, limits and retentions of peer companies in their industries, is a print summary of an online RIMS Benchmark Survey that is updated daily.

Data for the book was compiled and analyzed by Advisen Ltd. for the Risk and Insurance Management Society.

The 2009 book also presents findings from two new surveys on enterprise risk management and workers’ compensation claims management.

In addition, a broker services and remuneration survey was introduced last year, and was repeated this year to provide another look into the relationship of commercial insurance buyers and their brokers.

RIMS and Advisen said the broker remuneration and workers’ compensation surveys enable risk managers “to zero in on key activities that contribute to the cost of risk.”

Revealing a finding from the broker survey, the groups reported that compensating agents on a fee basis results in material savings over commission-based compensation, a finding consistent with last year’s report. (See NU Online News Service article, April 18, 2008 at http://property-casualty.com/News/2008/4/Pages/RIMS-Survey-Says-Prices-Decline-As-Broker-Competition-Grows.aspx)

This year’s workers’ compensation survey reveals that roughly 60 percent of companies have moderate to significant deficiencies in workers’ compensation claims management.

The 14 high-level industry groups covered in the surveys in the book are: energy, telecommunications, professional services, banks, consumer staples, education, government/non-profit, health care, information technology, utilities, consumer discretionary, industrials, materials and non-bank financials.

The survey book is available for a fee of $750 and the online program for a fee of $2,500. Purchase orders are available at www.RIMS.org/book. RIMS members and survey data contributors receive special discounts, RIMS said.

© Copyright 2009 National Underwriter Property & Casualty. A Summit Business Media publication. All Rights Reserved.