New York, NY -(BusinessWire)- Commercial insurance prices increased by 4% in aggregate during the first quarter of 2014, according to the latest Commercial Lines Insurance Pricing Survey (CLIPS) conducted by global professional services company Towers Watson (NYSE, NASDAQ: TW). Although prices continued growing, the increases are the smallest in over two years — a full percentage point lower than last quarter, and a steep decrease from the 6% to 7% reported in the second half of 2012 and first half of 2013. The survey compares carriers’ pricing on policies underwritten during the first quarter of 2014 to those underwritten in the same quarter of 2013.
Prices increased for every line of business, with most in the low- to mid-single digits. Increases were lower than those reported in the fourth quarter, however, with the exception of professional liability. Employment practices liability experienced the largest price increase year over year, with excess/umbrella liability and commercial auto also showing substantial increases. The survey did not reveal significant differences between small, mid-market and large accounts. Specialty pricing increased at a lower rate than pricing for standard lines, but the price increase ticked up slightly from the prior quarter.
According to respondents, loss ratios improved 2% for accident-year-to-date 2014 relative to the same period in 2013 (excluding catastrophes), as earned price increases continued to more than offset low claim cost inflation. This development builds on the estimated improvement of nearly 5% between 2012 and 2013. In aggregate, carriers reported approximately 1% claim cost inflation for 2013 and 2% for 2014.
“Price increases continue to decline. First quarter increases are one percentage point lower than last quarter, following several quarters of a moderate but steady slide,” said Tom Hettinger, Towers Watson’s Property & Casualty sales and practice leader for the Americas. “On the other hand, the resiliency of price increases is consistent with our view of the market’s focus on the management of risk, the uncertain inflationary environment and still-low fixed-income investment yields. Price increases may be mitigating, but they’re still outpacing claim inflation.”
The report is available here: Towers Watson Commercial Lines Insurance Pricing Survey (CLIPS) Q1 2014