Commercial insurance prices increased 3 percent in aggregate for Q2 2014, according to the “Commercial Lines Insurance Pricing Survey,” from Towers Watson, a global professional services company. The results confirm that price increases have been moderating since Q3 2013, after several quarters of increases of greater than 6 percent. The survey compares carriers’ pricing on policies underwritten during the second quarter of 2014 to those underwritten in the same quarter of 2013, Towers Watson said.
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According to the report, most lines of business showed price increases in the low-single digits, however prices for commercial property insurance declined for the first time in three years. More than half of commercial property respondents said prices decreased in Q2. The largest price increases were reported for employment practices liability and commercial auto. In general, the moderation in price increases was more evident for large accounts, Towers Watson said.
Excluding catastrophes, loss ratios improved 2 percent for accident-year-to-date 2014 compared to the same period for 2013, as earned price increases continued to offset claim cost inflation, according to the report. This development builds on the estimated loss ratio improvement of nearly 6 percent between 2012 and 2013, Towers Watson said. In aggregate, carriers reported flat claim cost inflation for 2013 and more than 2 percent for year-to-date 2014.
“Carriers are reporting loss ratios for 2013 and 2014 that benefit from 2012 and 2013 price levels. Now they are seeing a continuation of low loss cost trends and no lack of capital in the market, which may be leading to the slowdown in price increases,” said Alejandra Nolibos, director in Towers Watson’s property & casualty business. “In particular — and consistent with the availability of capital through abundant reinsurance capacity — property rates are dropping sharply.”
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