Commercial Lines Price Hikes Slowing: Towers Watson
Commercial insurance prices have risen for 12 straight quarters, including the latest jump of 5 percent in aggregate during the fourth-quarter of 2013. But price gains are slowing down, says Towers Watson.
The global professional services company published the Q4 update to its Commercial Lines Insurance Pricing Survey. The survey compares carriers’ pricing on policies underwritten during Q4 2013 to those underwritten in the same quarter of 2012. The latest 5 percent price-level increase falls below a 7 percent figure estimated for Q4 2012.
The aggregate figure of 5 percent for Q4 2013 was level with the third quarter 2013 survey result. For individual lines of business, Tower Watson reports that price hikes were lower in Q4 than in Q3 in all lines with the exception of general/products liability and excess/umbrella liability.
Without revealing specific figures, Towers Watson said employment practices liability experienced the largest price increase year over year, with workers’ compensation and excess/umbrella liability also showing substantial increases.
Other key findings were:
- Prices for most lines of commercial insurance showed gains in the mid-single digits.
- Specialty lines prices increased at a lower rate than standard lines.
- No line of business reported a price decrease.
- Price increases were consistent across account sizes.
Towers Watson said that survey respondents are reporting improved loss ratios, with accident-year 2013 ex-catastrophe loss ratios estimated to be 3 points better than accident-year 2012. Offering an explanation, the firm said that earned price increases are more than offsetting claim cost inflation.
The company also noted that the 3 point loss-ratio improvement builds upon estimated improvements of more 2 percent in each of the two prior years – 2012 and 2011.
“Commercial insurance prices are still on the rise and have now been increasing for three full years, but we are beginning to see a moderation in that trend,” said Tom Hettinger, property and casualty sales and practice leader for the Americas.