Canadian commercial lines policy charges up 1.1% in Q2 2015 from Q2 2014: Towers Watson

Prices charged on commercial lines policies underwritten during the second quarter of 2015 increased 1.1% for the same coverage during the second quarter in 2014, according to the latest Towers Watson Commercial Insurance Pricing Survey – Canada.

Once per quarter, participating companies provide premium volume, changes in prices for the latest quarter for each of the surveyed commercial lines of business they write, as well as their estimate of the changes in loss costs for that business, Towers Watson said in a press release on Tuesday. The most recent survey compared prices charged on policies underwritten during Q2 2015 to those charged for the same coverage during the same quarter in 2014. Data was contributed by seven Canadian insurers/groups, representing about 20% of the Canadian commercial insurance market, Towers Watson reported.

The survey noted that commercial insurance prices in aggregate have been increasing marginally for the past three years, with the increase highest in Q3 2014 at 2.9%. During Q2 2015, the increased had reduced to 1.1%.

According to Towers Watson, price increases were reported for all lines except professional liability. Survey respondents reported the largest price increases in the general products and liability line at 3.7%, followed by the commercial auto line at 3%.

“Commercial property shows minimal prices changes,” the report said, noting the price changes for all lines were in the low- to mid-single digits.

In addition, reported claims cost information revealed an improvement of 3.7% in loss ratios in the 2015 accident year, compared to the same period in 2014. Carrier estimates of the claim cost inflation underlying the loss ratio movement is -1% for the 2015 accident year.

“As year-to-date survey results provide a preliminary perspective, a subset of the participants provide claims cost inflation and as claims results can be volatile, insurers will wish to review and monitor additional data as it becomes available,” the survey said.

The Commercial Insurance Pricing Survey has been in existence in the United States since 2005, but is a “new and unique source for benchmarking historical changes in commercial P&C prices and loss costs in Canada,” Towers Watson noted. “With data provided directly from P&C insurers, the survey provides credible, data-based insights into current pricing and profitability to help carriers make critical business decisions.”