Towers Watson study shows more evidence of commercial rate hardening

Commercial insurance pricing in the United States increased by an average of 5% in 2012 Q1 over the same period last year, noted Tower Watson consulting.

This represented the fifth consecutive quarter that prices rose for all standard commercial lines, according to the professional services company’s Commercial Lines Insurance Pricing Survey (CLIPS).

In addition, Towers Watson stated that commercial insurers’ loss ratios stabilized for most insurance lines and improved in lines with the largest price increases.

“We are seeing a continuing trend of price-level increases in the commercial insurance marketplace,” said Thomas Hettinger, property and casualty sales and practice leader for the Americas at Towers Watson. “This quarter, the industry reached a significant threshold — an aggregate price increase of nearly 5% — the largest quarterly increase we’ve seen since 2004.”

CLIPS figures showed that the largest price increases were in commercial property and workers compensation lines, with the most significant premium hikes in mid-market accounts.

“We are likely to see improving loss ratios in the near future if this level of price increases and loss trends continues,” Hettinger noted. “This would be welcome news for the insurance industry, which has been dealing with low asset returns and significant catastrophe activity for the last few years.”