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Survey shows that Q4 2019 U.S. commercial insurance prices increase over 6%

Commercial Lines Insurance Pricing Survey 2019 Q4

Insurance Consulting and Technology

March 9, 2020

Willis Towers Watson’s Q4 Commercial Lines Insurance Pricing Survey again indicates significant upward price adjustments for multiple lines.

U.S. commercial insurance prices again accelerated in the fourth quarter of 2019, according to Willis Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS). The survey compared prices charged on policies underwritten during the fourth quarter of 2019 to those charged for the same coverage during the same quarter in 2018. The aggregate commercial price change reported by carriers was close to 2% for all four quarters of 2018 and the first quarter of 2019, climbing to almost 4% in the second quarter, almost 5% in the third quarter of 2019, and over 6% in the fourth quarter.

Line of business price changes

Data for nearly all lines indicated significant price increases in the fourth quarter, headlined by commercial auto, commercial property, excess/umbrella liability, and directors and officers liability, as all of these exceeded double digit rate increases. The past outlier in the results, commercial auto, saw reported price increases near or above double digits for the ninth consecutive quarter. Price changes for most lines again accelerated compared to third quarter 2019 increases. Directors and officers liability data had been indicating modest price increases for all of 2018, with sharp adjustments upward the past four quarters. CLIPS indicates ongoing material price reductions for workers compensation, in contrast to nearly all other surveyed lines, though the decreases have tempered for each of the last four quarters.

Account size price changes

When comparing account sizes, reported price changes were adjusted upward for mid-market and large accounts in the fourth quarter and are much larger than the price changes for small accounts, as the increases were fairly consistent with those taken in the third quarter of 2019 for small commercial business. Specialty lines price increases also trended upward materially in the fourth quarter.

Companies report claim cost inflation in aggregate of around 3% for both 2018 and 2019. This translates to loss ratio deterioration of 2% for 2018 and 1% for 2019, as the recently elevated price increases have not yet been earned.

For more information about CLIPS, contact:

Alejandra Nolibos

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