NEW YORK, December 9, 2013 — Commercial insurance prices increased by 5% in aggregate during the third quarter of 2013, according to the latest Commercial Lines Insurance Pricing Survey (CLIPS) conducted by global professional services company Towers Watson (NYSE, NASDAQ: TW). While this marked the 11th consecutive quarter of price increases, the gains appear to be tapering off, having dropped a point since the CLIPS edition from 12 months ago. The survey compares carriers’ pricing on policies underwritten during the third quarter of 2013 to those underwritten in the same quarter of 2012.  

Employment practices liability experienced the largest price increase year over year, with workers compensation and commercial auto also showing substantial increases. Prices for most lines of commercial insurance showed gains in the mid-single digits, while none of the classes surveyed reported a price drop. Price increases across all lines were smaller compared to the prior quarter, except for employment practices liability. Mid-market accounts had higher price increases than large and small commercial accounts; specialty lines prices increased at a lower rate than standard lines.

“The survey results are really in line with our expectations,” said Tom Hettinger, Towers Watson’s Property & Casualty sales and practice leader for the Americas. “This hard market is somewhat different from hard markets we have experienced before. Carriers are taking rate, which is logical, as they focus on measuring the capital required to support the business rigorously and realistically, and adjust their return expectations accordingly.”

According to respondents, loss ratios have improved between 3% and 6% for accident-year 2013 relative to 2012 (excluding catastrophes), as earned price increases more than offset stagnant reported claim cost inflation. In fact, carriers reported continuing favorable estimates of claim cost inflation for year-to-date 2013.

“Loss cost trends are benign — in fact, carriers are reporting flat loss costs. Yet the explicit recognition of risk, whether in the form of investment yield, inflation risk or catastrophe exposure, seems to be leading to much more disciplined pricing decisions,” said Hettinger.


CLIPS data are based on both new and renewal business figures obtained directly from carriers underwriting the business. CLIPS participants represent a cross section of U.S. property & casualty insurers that includes many of both the top 10 commercial lines companies and the top 25 insurance groups in the U.S. This particular survey compared prices charged on policies underwritten during the third quarter of 2013 to the prices charged for the same coverage during the same quarter in 2012. For the most recent survey, data were contributed by 43 participating insurers representing approximately 20% of the U.S. commercial insurance market (excluding state workers compensation funds).

About Towers Watson

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