Commercial insurance prices increased by 2 percent in aggregate during the fourth quarter of 2014, according to the latest Commercial Lines Insurance Pricing Survey by Towers Watson.
The price changes show a continued moderation of increases that began in the first quarter of 2013, with a pause in the third quarter of 2014, the professional services company said.
This survey compared prices charged on policies underwritten during the fourth quarter of 2014 to those charged for the same coverage during the same quarter in 2013. CLIPS data are based on both new and renewal business figures obtained directly from carriers underwriting the business, Towers Watson said.
Carriers in most lines reported price increases in the low single digits, smaller than in the prior quarter. Commercial property held steady for the second consecutive quarter following a slight price decrease in the second quarter of 2014.
Workers compensation price increases continued a sharp downward trend, similar to directors and officers liability, where prices were reported as flat, Towers Watson said.
Survey data also showed that loss ratios improved by 3 percent during 2014 (excluding catastrophes), compared with an estimated improvement of almost 5 percent between 2012 and 2013.
“The trend of moderation in price increases over the last 12 to 18 months is most significant for workers compensation, for which increases had peaked in late 2012 at almost 10 percent, and is consistent with the lingering benign loss environment,” said Alejandra Nolibos, a director with Towers Watson’s Property & Casualty Insurance practice.
“The industry continues to report favorable loss ratio trends, and the perception is that prices are adequate,” she said. “For long-tailed lines, though, much of the final underwriting result of the business being put in the books today will hinge on the long-term behavior of inflation.”
CLIPS participants represent a cross section of US property & casualty insurers that includes many of the top 10 commercial lines companies and the top 25 insurance groups. Data were contributed by 43 participating insurers representing approximately 20 percent of the US commercial insurance market (excluding state workers compensation funds).
