Workers compensation, commercial property and directors and officers insurance all experienced price decreases in the 2015 third quarter, during a period where commercial insurance prices overall barely moved at all.
Towers Watson’s newest Commercial Lines Insurance Pricing Survey indicates that commercial insurance prices rose just 0.8 percent during the quarter, continuing unabated the moderation of price increases that began in the 2013 first quarter.
There were a few bright spots in the survey. Employment practices liability and commercial auto, for example, reported the largest price increases in the commercial lines sector, Towers Watson said.
Another bit of good news: participating carriers said that historical claims cost information pointed to a 1 percent improvement in loss ratios for the 2015 accident year compared to the same period 2014. The reason why: earned price increases offset modest reported claim cost information for many lines, according to the survey.
But price increases, when they happened, were mostly in the single digits. Broken down further, price increases came in slightly negative for large accounts for the second consecutive quarter when a comparison of account sizes are factored in. As well, they moderated further for small, mid-market and specialty accounts.
Towers Watson said it does not make public percentage increases and decreases for each commercial line in its CLIPS report, making those numbers available only to survey participants.
Alejandra Nolibos, a director with Towers Watson’s Property/Casualty Insurance practice, said in prepared remarks that moderate cost trends could turn quickly for workers compensation in particular if inflation rises.
“The compounded effect on claims that won’t come off the books for years to come could offset prior gains,” Nolibos said.
Towers Watson’s Commercial Lines Insurance Pricing Survey uses data from new and renewal business figures that comes directly from carriers. The most recent survey contains data from 43 participating insurers reflecting 20 percent of the U.S. commercial insurance market, excluding state workers compensation funds.
Source: Towers Watson