Commercial prices climb in second quarter

Rates for commercial insurance increased by an average 6% in the second quarter of 2012, marking the sixth consecutive quarter that aggregate prices rose for all commercial lines, notes a recent survey by Towers Watson.

Price increases were seen in all commercial lines, but were higher in mid-market and large accounts, states the Commercial Lines Insurance Pricing Survey (CLIPS). The largest increases were in standard commercial lines, while specialty commercial pricing showed a more modest “rebounding,” Towers Watson reports.

The consulting firm also says that participating carriers posted an improvement of more than 1% in loss ratios in accident-year-to-date 2012 relative to 2011, as earned price increases more than offset reported claim cost inflation. This is a reversal from the estimated 3% loss ratio deterioration between 2010 and 2011.

“Improving loss ratios do not necessarily mean better results, as faltering investment income offsets improvements in underwriting outcomes,” says Thomas Hettinger, property/casualty sales and practice leader for the Americas at Towers Watson. “Insurers’ success as 2012 draws to a close will continue to depend on pricing discipline and moderate loss trends.”

CLIPS’ participants represent a cross section of U.S. property and casualty insurers that includes many of both the top 10 commercial lines companies and the top 25 insurance groups in the United States.