In aggregate, commercial insurance prices increased 6 percent during Q3 2012 compared with the same period last year, according to “Commercial Lines Insurance Pricing Survey (CLIPS),” a survey conducted by Towers Watson. This was the seventh consecutive quarter that aggregate prices for all commercial lines rose.

Year-over-year, price increases for workers’ compensation are approaching double digits and lead the increases, followed by employment practices liability and commercial property, where price increases have moderated compared to last quarter. Price increases have accelerated for all other remaining surveyed standard commercial lines since Q2 2012. For standard commercial lines, midmarket and large accounts experienced the largest increases this quarter, and specialty lines prices also increased.

“In the current environment, underpricing of current business could seriously harm net income,” said Tom Hettinger, P&C sales and practice leader for the Americas, Towers Watson. “Declining reserve releases, combined with insufficient investment income, have put enormous pressure on earnings. Pricing discipline, as a result, is even more important — and underwriting results really need to perform well for the foreseeable future.”

Year to date, loss ratios for accident-year 2012 improved more than 3 percent compared to the same period in 2011, as earned-price increases than offset reported claim-cost inflation.

“If this level is maintained through year-end and as losses develop, it will indicate a reversal from the estimated 4-percent deterioration between 2010 and 2011,” the report said.

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