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Survey Report

Survey shows continued significant adjustments in Q3 2019 U.S. commercial insurance prices

Insurance Consulting and Technology
Insurer Solutions

December 9, 2019

Willis Towers Watson’s Q3 Commercial Lines Insurance Pricing Survey again indicates significant upward price adjustments for multiple lines.

U.S. commercial insurance prices again accelerated in the third 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 third 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, and over 4% in the third quarter of 2019.

Line of business price changes

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

Account size price changes

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

While still elevated, companies have revised their estimates of claim cost inflation in aggregate for 2018 to just below 3%, which translates to nearly equivalent levels of indicated loss ratio deterioration. Companies indicate more modest claim cost inflation of less than 1% for 2019 to date.

U.S. commercial insurance prices accelerated during the third quarter of 2019.The Willis Towers Watson Commercial Lines Insurance Pricing Survey compared prices charged on policies underwritten during the third quarter of 2019 to those for the same coverage during the third quarter of 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, and over 4% in the third quarter of 2019.
For more information about CLIPS, contact:


Jacob Roe
Manager

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