Arlington, VA – Commercial insurance prices increased by a modest 3% in aggregate during the third quarter of 2014, according to the latest Commercial Lines Insurance Pricing Survey (CLIPS) conducted by global professional services company Towers Watson (NYSE, NASDAQ: TW). Price changes remained at nearly the same level as last quarter, after five consecutive quarters of moderation in the rates of increases. The survey compares carriers’ pricing on policies underwritten during the third quarter of 2014 to those underwritten in the same quarter of 2013.
Price increases are similar to those from the previous quarter for most commercial lines, but carriers reported continuing moderation in workers compensation, and some of the specialty lines surveyed were offset by stabilization in property. The employment practices liability line reported the largest price increases, followed by commercial auto. 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.
Survey results indicated 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,” said Alejandra Nolibos, director in Towers Watson’s Americas P&C practice. “We are seeing this for many of the lines surveyed, but I would highlight property. 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.”
The survey noted that 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 offset reported claim cost inflation for many lines. This trend builds on an estimated improvement of nearly 6% between 2012 and 2013. In aggregate, carriers reported relatively flat claim cost inflation for accident-year 2013 and approximately 2% for 2014 year to date.
The report is available here: Towers Watson: Commercial Lines Insurance Pricing Survey Q3 2014
Source: Towers Watson