Commercial insurance prices continued to moderate in the 2014 second quarter. This time, they inched up 3 percent in aggregate, versus a 4 percent increase in the first three months of this year, a new Towers Watson survey concluded.
Thus continues a trend of gradually slowing price increases that began in the 2013 third quarter, capping a period of quarterly jumps that surpassed 6 percent.
Towers Watson noted that most business lines increased in the low single digits during Q2. But prices for commercial property actually declined, the first time in three years that property prices fell. There’s more sobering news. The second-quarter results reflect the first time since the end of 2011 that any of the surveyed lines reflected a decrease. Individually, more than half of commercial property respondents to the survey said they experienced price decreases, Towers Watson said.
“Carriers are reporting loss ratios for 2013 and 2014 that benefit from 2012 and 2013 price levels,” Alejandra Nolibos, director in Towers Watson’s property & casualty business, said in a statement.
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.”
At the same time, a number of commercial insurance lines showed price increases. Employment practices liability achieved the biggest price hike, Towers Watson said, followed by commercial auto.
Workers’ compensation reported more modest increases during Q2, a drop after achieving the largest price increases just 18 months ago.
Towers Watson said the price increase-moderations were more common for large accounts than small and mid-market accounts.
Other data from the new survey:
- Loss ratios improved 2 percent for accident-year-to-data 2014, relative to the same period in 2013 (excluding price increases)
- The estimated loss ratio improved nearly 6 percent between 2012 and 2013
- Carriers reported, in aggregate, approximately flat claim cost inflation for 2013, but they noted more than 2 percent for 2014, year-to-date.
The data is part of Towers Watson’s quarterly Commercial Lines Insurance Pricing Survey, which compares prices charged on policies underwritten during the second quarter of 2014 to the prices charged for the same coverage during the same quarter in 2013. Towers Watson said 44 insurers representing about 20 percent of the U.S. commercial insurance market (excluding state workers compensation funds) participated in the most recent survey.
Source: Towers Watson