Prices charged on policies underwritten by Canadian commercial lines insurers up 3.1% in Q1 2015 compared to Q1 2014: Towers Watson CLIPS survey

Prices charged on policies underwritten by Canadian commercial lines insurers during the first quarter of 2015 increased 3.1% compared to same quarter in 2014, according to the latest Towers Watson Commercial Lines Insurance Pricing Survey (CLIPS) – Canada survey released last week.

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, said Towers Watson, a global professional services company. The most recent survey compared prices charged on policies underwritten during Q1 2015 with Q1 2014 and data was contributed by seven Canadian insurers/groups, representing approximately 20% of the Canadian commercial insurance market.

The survey found that commercial insurance prices in aggregate have been increasing marginally for the past three years, with the first quarter 2015 results the highest reported since Q2 2011. “The price increases have been relatively stable for the last four quarters,” the release added.

Survey results are intended to exclude catastrophes.

Price increases were reported for all lines except professional liability, the release said, adding that survey respondents reported the largest prices increases in the excess and umbrella liabilities lines, followed closely by the general products and liability line.

The commercial auto and property lines also had relatively high increases at 3.4% and 3.5%, respectively. These two lines combined represent approximately 85% of the total volume.

Price changes for all lines were in the low- to mid-single digits.

The release also noted that reported claim cost information reveals an improvement of 6.2% in loss ratios in the accident year to date 2015 compared to the same period in 2014. “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,” Towers Watson said.

Carrier estimates of the claim cost inflation underlying the loss ratio movement in -2.8% for the accident year to date 2015.