Commercial insurance prices in the U.S. were again nearly flat during the second quarter of 2016, according to Willis Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS). The survey compared prices charged on policies underwritten during the second quarter of 2016 to those charged for the same coverage during the same quarter in 2015. Price changes reported by carriers were nearly flat for several quarters, following a moderating trend in price increases that began in the first quarter of 2013.
Change in price level versus same quarter one year prior
In general, price changes in the second quarter for most lines of business were fairly consistent with changes reported in the first quarter. Also consistent with the first quarter, three lines (workers compensation, commercial property, and directors and officers) reported modest price decreases.
The outlier in the results continues to be commercial auto, where meaningful price increases continue to be reported and have even mildly accelerated over the past four quarters. Price changes for most other lines fell in the low single digits. When comparing account sizes, price increases were nearly flat for both large accounts and mid-market accounts for the seventh consecutive quarter. Small commercial accounts moderated somewhat and are nearly flat as well. Specialty account price changes in aggregate were slightly negative.
Historical claim cost information reported by participating carriers points to flat loss ratios in both accident-year 2015 relative to the same period in 2014 as well as in accident-year 2016 to date, as earned price increases offset benign reported claim cost inflation for many lines. Some of the higher claim cost inflation indications are coming from commercial auto, professional liability and excess/umbrella lines, but the overall commercial inflation indications are modest.