Canadian commercial insurance prices in aggregate showing marginal increases since 2012, says Towers Watson survey

Commercial insurance prices in aggregate have been increasing marginally for the past two years, with the 2014 fourth quarter results the highest reported since Q2 2012, according to a new survey from Towers Watson.

Released to the media on Tuesday, the Towers Watson Commercial Lines Insurance Pricing Survey – Canada (CLIPS Canada) found that price increases were reported for all lines except professional liability. Survey respondents reported the largest price increases in the commercial auto and property lines, followed closely by the general products and liability line. Price changes for all lines were in the low- to mid-single digits.

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. The most recent survey compared prices charged on policies underwritten during Q4 2014 to those charges for the same coverage during the same quarter in 2013. For the most recent survey, data was contributed by seven Canadian insurers/groups, representing about 20% of the Canadian commercial insurance market.

Survey results are intended to exclude catastrophes.

“While CLIPS has been in existence in the U.S. since 2005 and has become a trusted source of information, the survey is a new and unique source for benchmarking historical changes in commercial P&C prices and loss costs in Canada,” said Allison McLeod, a spokesperson for Towers Watson, in an email. “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. Insurers will need to monitor both the market and their claims results to maintain competitiveness and profitability.”

Besides the marginal increase in commercial insurance prices in aggregate, the survey also revealed the following aggregate findings:

• Respondents reported a 3.1% increase during Q4 2014;

• Reported claim cost information reveals a deterioration of 12% is loss ratios in the accident year 2014, compared to the same period in 2013; and

• Carrier estimates of the claim cost inflation underlying the loss ratio movement was 14% for the accident year 2014.