NU Online News Service, March 25, 11:48 a.m. EDT
Carriers say commercial insurance prices were relatively unchanged for the eighth consecutive quarter, while accident-year loss ratios deteriorated on a year-to-year basis, according to a recent pricing survey from Towers Watson.
The New York-based consulting firm issued its most recent Commercial Lines Insurance Pricing Survey (CLIPS) findings, saying commercial insurance prices, in aggregate, declined by 1 percent during the fourth quarter of 2010 on a year-to-year basis.
The survey is based on the perspectives of 38 participating insurance companies, representing about 20 percent of the commercial market, the firm says.
While pricing for the majority of lines remained flat, commercial property, professional liability, directors and officers liability, and employment practices liability lines showed greater price reductions for the fifth consecutive quarter.
Aggregate price change indications showed some differentiation by account size, with flat indications for small and mid-market accounts, and price reductions in large accounts and specialty lines.
The survey also indicates that accident-year 2010 loss ratios increased 5 percent on a year-to year basis.
The firm says this deterioration is higher than the estimated deterioration of 2 percent for accident-year 2009 over 2008.
The relatively modest price declines experienced in 2010 on an earned basis are compounded by higher reported claim-cost inflation indications than those for 2009.
Towers Watson says CLIPS findings indicate 2010 claim-cost inflation of approximately 4 percent, consistent with long-term averages.
"The slightly negative 2009 claim-cost inflation indicated in our survey is the lowest we've observed in the history of the survey," observes Bruce Fell, director of Towers Watson's property and casualty practice in the Americas. "The recession appears to have had a very significant dampening effect on losses during 2009, which likely reduced pricing pressures in calendar 2010."
"Our survey results for 2010 support the contention that the economic recovery will be accompanied by higher cost trends, and those estimates could increase if additional 'catch-up' from 2009 negative trends—beyond a return to long-term averages—would occur with rebounding economic conditions."
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