Commercial insurance prices increased by 2 percent in aggregate during the fourth quarter of 2014, according to the “Commercial Lines Insurance Pricing Survey,” conducted by Towers Watson, a global professional services company.
The survey compared prices charged on policies underwritten during Q4 2014 to those charged for the same coverage during Q4 2013. Carriers reported continuing moderation of price increases, which began in Q12013, albeit with a brief pause in the third quarter of 2014, Towers Watson said.
Carriers reported that price increases fell in the low single digits for most lines, and were smaller than in the previous quarter. Commercial property held steady for the second consecutive quarter following a slight price decrease in the second quarter of 2014, but price increases for workers comp continued a sharp downward trend; directors and officers liability prices were reported as flat.
“The trend of moderation in price increases over the last 12 to 18 months is most significant for workers compensation, for which increases had peaked in late 2012 at almost 10 percent, and is consistent with the lingering benign loss environment,” said Alejandra Nolibos, a director with Towers Watson’s Property & Casualty Insurance practice. “The industry continues to report favorable loss ratio trends, and the perception is that prices are adequate. For long-tailed lines, though, much of the final underwriting result of the business being put in the books today will hinge on the long-term behavior of inflation."The moderation in price increases is reflected in the tapering of improvement in loss ratios, Towers Watson said. Survey data showed that loss ratios improved by 3 percent during 2014, excluding catastrophes, compared to an estimated improvement of nearly 5 percent between 2012 and 2013.
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