Survey shows increase in Q4 2018 commercial insurance prices

Commercial Lines Insurance Pricing Survey 2018 Q4

March 11, 2019
| Bermuda, United States

Commercial insurance prices again increased in the fourth quarter of 2018, 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 2018 to those charged for the same coverage during the same quarter in 2017. The aggregate commercial price change reported by carriers was in excess of 1% for all four quarters of 2018, coming in just under 2% in the fourth quarter.

Data for three standard lines indicated material price increases in the third quarter; commercial auto, commercial property, and excess/umbrella liability. Price changes for most lines were similar to those reported in the third quarter of 2018. Commercial property price data, which had been showing small price decreases for much of 2017, indicted price increases in excess of 4% for all four quarters of 2018. The outlier in the results continues to be commercial auto, where significant price increases are again reported and are at or near double digits for the fifth consecutive quarter. CLIPS indicates ongoing material price reductions for workers compensation, in contrast to all other surveyed lines.

When comparing account sizes, price changes were positive and of reasonably similar magnitude across all segments for the third consecutive quarter, as opposed to 2017 where mid-market and large accounts price changes were generally flat. Specialty account prices increased modestly for all four quarters of 2018, and are of similar magnitude to standard lines in aggregate.

Participating companies indicate elevated levels of claim cost inflation in aggregate for 2018, with estimates above 4% on an earned basis, compared to estimates below 2% for 2017, which translates to nearly equivalent levels of indicated loss ratio deterioration.

Change in price level vs. same quarter one year prior

Change in price level vs. same quarter one year prior