“Flat” is close to becoming the new buzzword for commercial insurance pricing. For the 2015 fourth quarter, pricing barely ticked up 1 percent, according to Willis Towers Watson’s updated survey of the sector.
Commercial auto saw increases, but it was a rare bright spot in the sector.
Overall, the global risk manager, analyst and broker said its latest Commercial Lines Insurance Pricing Survey continued what has become a years-long saga: moderation of pricing that began in early 2013. Alejandra Nolibos, director in Willis Towers Watson’s Americas Property & Casualty Insurance practice, noted that the market is still technically in positive territory, but pointed out that this depended on specific lines.
“For example, we see another quarter of price increases for commercial auto liability – fueled by deterioration in claim costs – while director and officer price decreases, which started a year ago, continue to accelerate as the market competes for best performing segments,” Nolibos said in prepared remarks. “This means a conclusion on pricing for the overall market is hard to interpret, but carriers continue to report modest claim cost inflation for most lines surveyed, which is keeping loss ratio movements in check.”
Even so, consider how things have changed in just a few years. As Willis Towers Watson noted, pricing grew flat numbers or declines in 2009 and 2010 to average hikes of 6 percent and 7 percent through 2012. Now, price hikes are almost non-existent, according to the survey.
Broken down, workers compensation, commercial property, and directors and officers reported modest price decreases, continuing Q3 2015 trends. Most other lines experienced low single-digit price changes, Willis Towers Watson said.
Commercial auto continued to see “meaningful price increases, as it had over the previous three quarters, the survey noted.
For the fifth consecutive quarter, price increases for large accounts were nearly flat. The same held true for mid-market accounts for the second consecutive quarter. Small commercial accounts held their own, however, with modest price upticks over the last few quarters, according to the survey.
Overall, specialty accounts in aggregate saw their price changes turn negative for the first time since the 2011 fourth quarter.
Source: Willis Towers Watson