Despite falling policyholder surplus, insurers continued to compete vigorously for business in the second quarter of 2009, according to the quarterly RIMS Benchmark Survey, produced by New York-based Advisen Ltd.

With the exception of directors and officers insurance premiums for financial services companies, average commercial insurance premiums continued to fall in the second quarter compared with the same period in 2008, the survey shows.

Falling demand as a result of the recession has prolonged the soft market, Advisen said.

“Insurance capacity is disappearing at a startling rate, but the market nonetheless remains competitive,” Dave Bradford, executive vp of Advisen, said in a statement. “As a result of the recession, the demand for insurance capacity also has decreased, which has kept pressure on rates. Companies are downsizing, which means that there is simply less to insure,” he said.

Workers compensation renewal premiums were down an average of 2.8% in the second quarter, while general liability renewal premiums posted a 1.1% drop on average, according to the benchmark survey. D&O premiums increased on average 2.9% in the quarter; but excluding financial services companies, policies renewed with a 4.1% average decrease. Property premiums fell less than 1%, compared with a 6.1% drop in the second quarter of 2008.

“If the gloom of the global recession has a silver lining for risk managers, it is the competitive insurance market,” said Daniel H. Kugler, a board member of the New York-based Risk & Insurance Management Society Inc. and assistant treasurer-risk management at Snap-on Inc. “The soft market appears to be winding down, but except for increases already taking place in some financial segments, there are no strong signals that rates will rebound sharply in the near future,” he said in the statement.

Copyright © 2009 Crain Communications, Inc.