U.S. commercial insurance prices up 3% in third quarter

Commercial insurance prices in the United States continued a familiar trend in the third quarter of the year, with price changes – up 3% in aggregate over the same quarter in 2013 – at almost the same level as Q2 of 2014 notes the latest Commercial Lines Insurance Pricing Survey (CLIPS) from Towers Watson.

The numbers for Q3 of 2014 follow five consecutive quarters of moderation in the rates of increases, notes a statement Monday from Towers Watson, a global professional services company. “Price increases for most commercial lines registered in the low single digits. Commercial property data indicated flat pricing following a slight price decrease one quarter ago,” the company reports.

Data for the most recent CLIPS are based on both new and renewal business figures obtained directly from 43 carriers underwriting the business. The insurers – accounting for approximately 20% of the U.S. commercial insurance market, excluding state workers compensation funds – represent a cross section of U.S. property and casualty insurers.

Towers Watson reports price increases are similar to those from the previous quarter for most commercial lines. Carriers also reported the following:

• continuing moderation in workers’ compensation;
• some specialty lines surveyed were offset by stabilization in property;
• the employment practices liability line had the largest price increases, followed by commercial auto; and
• there were more moderate price increases for large and specialty accounts compared to small and mid-market accounts.

“After many quarters of moderation in price increases, we are seeing a lull,” Alejandra Nolibos, director in Towers Watson’s Americas P&C practice, notes in the statement. With regard to property, however, “last quarter, we noted price changes for that class had reached negative territory; recent data, however, indicate flat pricing. Increases in workers compensation pricing, on the other hand, continue to moderate,” Nolibos continues.

With regard to loss ratios, these improved 2% for accident-year-to-date 2014, relative to the same period in 2013 (excluding catastrophes), as earned price increases continued to offset reported claim cost inflation for many lines, Towers Watson reports. “This trend builds on an estimated improvement of nearly 6% between 2012 and 2013,” the company adds.