Towers Watson: Commercial Lines Rates Up Again, but Increases May Moderate

Commercial insurance prices increased by 5% in aggregate in 2013’s third quarter, says Towers Watson, but the risk consultant forecasts the hardening trend will taper.

Data from the Towers Watson Commercial Lines Insurance Pricing Survey (CLIPS), obtained from 43 insurers representing about 20% of the U.S. property and casualty commercial-insurance market, shows the Q3 increase follows 11 consecutive quarterly price hikes.

However, aggregate pricing dropped by a point since the same period last year.

Prices increased by about 6% from the second quarter of 2011 to the second quarter of 2012. The rate of increase stayed flat at about +6.5% through this year’s second quarter, but then dropped by about a point by the third quarter of 2013.

“This hard market is somewhat different from hard markets we have experienced before,” says Tom Hettinger, Towers Watson’s P&C sales and practice leader for the Americas.

“Carriers are taking rate, which is logical, as they focus on measuring the capital required to support the business rigorously and realistically, and adjust their return expectations accordingly.”

Employment practices liability experienced the largest year-over-year price increase.

Price increases across all lines were smaller compared to the prior quarter, except for EPL. Mid-market accounts had higher price increases than large and small commercial accounts, and specialty lines prices increased at a lower rate than standard lines.

Loss ratios are “benign”, says Hettinger, as the change in earned loss ratios between accident years 2012-2013 have fallen by about 6%, a 1.5% improvement since the Q3 2011- Q3 2012 reporting period.

Still, says Hettinger, “the explicit recognition of risk, whether in the form of investment yield, inflation risk or catastrophe exposure, seems to be leading to much more disciplined pricing decisions.”

About the Author
Anya Khalamayzer, PropertyCasualty360.com

Anya Khalamayzer, PropertyCasualty360.com

Anya Khalamayzer is Assistant Editor of Risk for PropertyCasualty360-National Underwriter. Khalamayzer graduated from CUNY Baruch College after intensive internships with Time Out New York Kids and Crain’s Investment News. Keenly interested in environmental science, music and the arts, her articles have been published in Gotham Gazette, Wonkster blog and Ear to Mind magazine. She can be reached at akhalamayzer@summitpronets.com

Comments

Resource Center

View All »

Complimentary White Paper: The Compression of Workplace Time

How brokers and carriers respond to the compression of workplace time will create significant competitive...

The Changing Insurance Consumer: 6 Ways to Create Profitable Relationships

Today’s mobile and web-savvy consumers have new expectations when it comes to interacting with your...

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Agent & Broker Insider eNewsletter

Proven success tips and essential information to help agents and brokers grow their practice – FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.