Survey shows an acceleration of price increases in each quarter of 2011
Towers Watson says commercial insurance prices increased an aggregate of three percent in the fourth quarter of 2011. This latest increase marks the fourth consecutive quarter in which prices for all standard commercial lines have increased.
“While modest, aggregate increases in prices continued, and more importantly, these increases accelerated in each quarter of 2011,” said Thomas Hettinger, Property & Casualty sales and practice leader for the Americas at Towers Watson. “We are now at a point where we can ‘call the pricing turn’ in the market. We will have a more complete picture of companies’ overall 2011 performance as we analyze year-end reserve adequacy and releases,” continued Hettinger. “We have seen signs of insurers reacting to the deteriorating loss ratios by raising prices, and we are still getting an understanding of how strong pricing discipline will need to be to overcome the trends in losses.”
In its recently published Commercial Lines Insurance Pricing Survey or CLIPS, Towers Watson says that earned prices are beginning to offset portions of reported claim cost inflation levels.
Mid-Market accounts showing the largest price increases
- Prices for workers compensation and commercial property demonstrated the largest quarterly increases, in the mid-to-high single digits;
- General/products liability prices followed closely behind the worker’s compensation and commercial property numbers;
- Workers compensation continued its trend for the fourth consecutive quarter, reporting price increases after four quarters of flat pricing in 2010;
- Data indicate that workers compensation prices are increasing on a countrywide basis;
- Commercial property prices increased for the third consecutive quarter;
- Specialty lines as a whole remained flat;
- Towers Watson saw the largest price increases in mid-market accounts;
Historical loss cost information reported by participating carriers points to a 3% deterioration in loss ratios in accident-year 2011 relative to 2010 says Towers Watson. This is a more favorable indication than “the the estimated level of deterioration for the accident-year 2010 loss ratio over 2009 of 5%, as earned price increases are beginning to offset portions of reported claim cost inflation.”
The company says that its CLIPS survey data is based upon both new and renewal business figures obtained directly from carriers underwriting the business1. 41 carriers participated in this edition of the survey, representing approximately 20 percent of the U.S. commercial insurance marketplace (excluding state workers compensation funds.)
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