Commercial insurance prices were again nearly flat during the fourth 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 fourth quarter of 2016 to those charged for the same coverage during the same quarter in 2015. Price changes reported by carriers were less than 1% for the fifth consecutive quarter, 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 third quarter for most lines of business were fairly consistent with changes reported in the third quarter. Two lines (workers compensation and commercial property) indicated modest price decreases, and directors and officers data indicated more significant but moderating price decreases.
The outlier in the results continues to be commercial auto, where meaningful price increases continue to be reported. Price changes for most other lines fell in the low single digits. When comparing account sizes, price changes were fairly similar across each segment, though slightly negative for large accounts, and slightly positive for small and mid-market accounts. Specialty account price changes in aggregate were again slightly negative.
Historical claim cost information reported by participating carriers points to a loss ratio improvement of 2% in 2015, and flat loss ratios in 2016, as tapering earned price increases still offset modest claim cost inflation reported for many lines.