December 14, 2015 by Canadian Underwriter
There was little change in commercial insurance premiums reported by carriers surveyed by Towers Watson & Co. in the third quarter of 2015 compared to the same period in 2014, while loss ratios improved overall by 1%.
“Commercial insurance prices were nearly flat during the third quarter of 2015,” consulting firm Towers Watson stated of its Commercial Lines Insurance Pricing Survey (CLIPS).
“The survey compared prices charged on policies underwritten during the third quarter of 2015 to those charged for the same coverage during the same quarter in 2014,” reported Arlington, Va.-based Towers Watson. “Price changes reported by carriers continue a moderation of price increases that began in the first quarter of 2013.” [Click image below to enlarge]
Towers Watson, whose services include product development, predictive modeling, claims consulting and catastrophe modeling for the insurance industry, surveys U.S. carriers for CLIPS, its study on pricing and profitability.
“Historical claim cost information reported by participating carriers points to an improvement of 1% in loss ratios in accident-year 2015 relative to the same period in 2014, as earned price increases offset modest reported claim cost inflation for many lines,” Towers Watson said of its Q34 CLIPS. “This indication compares to the flat loss ratio change between 2013 and 2014.”
Towers Watson only gives detailed survey results to CLIPS participants. It breaks it down by account size and commercial insurance line.
“Nearly all lines that reported price increases in the prior survey continued to moderate further in the third quarter, with the exception of employment practices liability,” Towers Watson reported. “Consistent with the second quarter, three lines (workers compensation, commercial property, and directors and officers) reported price decreases in the third quarter of 2015.”
For most lines, price increases were in the “low single digits,” the company reported.
“The largest price increases reported were in the employment practices liability line, followed by commercial auto.”
Towers Watson – which was formed in 2010 with the merger of Towers, Perrin, Forster & Crosby Inc. and Watson Wyatt Worldwide Inc. – recently agreed to merge with London-based brokerage Willis Group Holdings plc. If the US$18-billion merger is approved by regulators, the combined firm will be called Willis Towers Watson. Shareholders of both firms, which are traded on the New York Stock Exchange, voted Dec. 11 in favour of merging.