NU Online News Service, June 12, 12:00 p.m. EDT
Towers Watson reports the largest quarterly commercial insurance price increase since 2004.
The most recent Commercial Lines Insurance Pricing Survey (CLIPS) reveals aggregate commercial insurance prices rose 5 percent during the first quarter compared to policies underwritten during the same period a year ago.
The last quarterly price increase of this size was seen during 2004’s first quarter.
CLIPS found prices increased 3 percent during 2011’s fourth quarter, compared to the prior year.
Increases appear to be catching up to loss costs, according to the survey. Loss ratios deteriorated less than 1 percent for accident-year 2012 compared to 2011—a favorable development compared to an estimated 3 percent deterioration between 2010 and 2011, says Towers Watson.
“We are likely to see improving loss ratios in the near future if this level of price increases and loss trends continue,” says Thomas Hettinger, property and casualty sales and practice leader for the Americas at Towers Watson. “This would be welcome news for the insurance industry, which has been dealing with low asset returns and significant catastrophe activity for the last few years.”
Mirroring the findings of a recent report on the market from MarketScout, CLIPS finds the largest price increases are in workers’ compensation and commercial property. CLIPS says workers’ comp and commercial-property prices increased for the fifth and fourth consecutive quarter, respectively.
MarketScout says pricing in workers’ compensation and commercial property was up 5 percent in May.
First-quarter price increases were seen across all account sizes, with the largest in mid-market accounts, says CLIPS. Increases in specialty lines were less than 2 percent, according to the survey.