Commercial Lines Insurance Pricing Survey 2017 Q4

Survey reveals commercial insurance prices made larger gains than prior quarter, though modest in aggregate

March 12, 2018
| Bermuda, United States

Commercial insurance prices inched upward in the fourth quarter of 2017, 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 2017 to those charged for the same coverage during the same quarter in 2016. Price changes reported by carriers still averaged 1% or less for the tenth consecutive quarter, following a moderating trend in price increases that began in the first quarter of 2013.

Data for two lines indicated material price decreases in the fourth quarter, workers compensation and directors & officers liability. CLIPS indicates continuing price reductions of increasing magnitude for workers compensation, in contrast to most other lines. Commercial property price data, which had been showing decreases for much of the recent past, now indicates increases in the low single digits, possibly in reaction to third quarter catastrophe activity. The outlier in the results continues to be commercial auto, where meaningful price increases are again reported and are accelerating to near double digits.

When comparing account sizes, price changes were positive across all segments, as large accounts moved from modest reductions to modest increases in aggregate.

CLIPS data points to flat loss ratio movement for 2016 and a modest deterioration of 1% for 2017 (net of catastrophe activity). Insurers indicate 1% claim cost inflation for 2017, which is in excess of the nearly flat earned price changes realized during the year.

Change in price level vs. same quarter one year prior