NU Online News Service, March 17, 3:05 p.m.EST

A competitive market landscape has perpetuated flat commercialinsurance prices during the fourth quarter of 2009, according toTowers Watson, a global professional services company.

The New York-based company said that after nearly five years ofsteady price decreases, its most recent Commercial Lines InsurancePricing Survey (CLIPS) revealed little or virtually no priceincreases throughout 2009.

The survey compared prices charged on policies underwritten by36 participating insurance companies during the fourth quarter of2009 to pricing for the same coverage during the fourth quarter of2008.

Pricing data for most lines of coverage show small increasesoffset by price reductions in workers' compensation and employmentpractices liability insurance.

For workers' comp, the latest quarterly data indicated areduction in year-over-year loss costs that may be holding backpressure to increase prices.

"The workers compensation loss cost trend may be an outcome offewer claims linked to factors such as the economy," said BruceFell, Towers Watson senior consultant and leader of the company'sproperty and casualty insurance practice in the Americas.

He added that fear of job loss or reductions in income deterworkers' comp claim reporting, and "the workforce is, on average,more experienced, given lower-tier job reductions."

CLIPS findings indicate that accident-year 2009 loss ratiosdeteriorated 3 percent relative to 2008. However, thisdeterioration comes in addition to an estimated deterioration foraccident-year 2008 of 9 percent over 2007. Flat aggregate loss costchanges indicate an improvement in claim cost inflation, which,combined with stabilizing prices, contribute to the relativelymodest 2009 change.

Aggregate price change indications showed little differentiationby account size, as all were nearly flat, Towers Watson said.

"Longer-term inflationary pressure, due in large part tofinancial crisis bailouts, may lead insurers to exhibit morediscipline in their pricing," added Mr. Fell. "They're lookingahead in the event that inflation starts to negatively anddramatically impact loss reserves and loss costs."

CLIPS data are based on both new and renewal business figuresthat are--when available--obtained directly from carriersunderwriting the business. This particular survey compared pricescharged on policies underwritten during the fourth quarter of 2009to the prices charged for the same coverage during the same quarterin 2008.

CLIPS participants represent a cross section of U.S. p&cinsurers that include many of both the top 10 commercial linescompanies and the top 25 insurance groups in the United States.CLIPS' measurement of both pricing changes and loss ratio changesalso sets it apart from other studies.