U.S. commercial insurance prices increased 2% in Q1: Towers Watson

Commercial insurance prices increased in aggregate at a modest pace (2%) during the first quarter of 2015, according to the latest Commercial Lines Insurance Pricing Survey (CLIPS) conducted by global professional services company Towers Watson.

The survey, released on Monday, compared prices charged on policies underwritten during the first quarter of 2015 to those charged for the same coverage during the same quarter in 2014.

Price increases for most insurance lines were in the low single digits, with commercial auto and employment practices liability reporting the largest increases, Towers Watson noted in a press release. “However, employment practices liability price increases continue to drop, as do commercial property prices, which continue to show small but stable price decreases,” the release said, adding that survey results indicated large account prices increasing at a lower rate than small and mid-market accounts.

Overall, carriers reported an improvement of 2% in loss ratios in accident-year-to-date 2015 relative to the same period in 2014, as earned price increases continue to offset reported claim cost inflation for many lines. This builds on the estimated improvement of nearly 2% between 2013 and 2014. [click image below to enlarge]

“Commercial insurers still report favorable loss ratio trends in aggregate, even after many quarters of slowing price increases,” said Alejandra Nolibos, a director with Towers Watson’s property & casualty insurance practice, in the release. “However, price increases are barely offsetting loss cost inflation in some lines; we may start to see pressure on the bottom line as reserve redundancies dry up,” she added.

CLIPS data are based on both new and renewal business figures obtained directly from carriers underwriting the business. CLIPS participants represent a cross section of U.S. property & casualty insurers, including many of the top 10 commercial lines companies and the top 25 insurance groups in the U.S. For the most recent survey, data were contributed by 44 participating insurers, representing approximately 20% of the U.S. commercial insurance market (excluding state workers compensation funds).