Commercial insurance prices in aggregate increased by 6% during the
third quarter of 2012. This marked the seventh consecutive quarter that
aggregate prices for all commercial lines rose, according to the new Commercial
Lines Insurance Pricing Survey (CLIPS). The survey, conducted by
Towers Watson (NYSE, NASDAQ: TW), a global professional services
company, compared price levels on policies underwritten during the third
quarter of 2012 to those charged for the same coverage during the third
quarter of 2011.
The largest price increases year over year included workers
compensation, now approaching double digits, and employment practices
liability, followed closely by commercial property, where price
increases have moderated somewhat since last quarter. Increases have
accelerated for each of the remaining surveyed standard commercial lines
since the second quarter. Within standard commercial lines, midmarket
and large accounts saw the largest increases this quarter. Specialty
lines prices also continue to increase, but not as rapidly.
Loss costs reported by participating carriers pointed to an improvement
of more than 3% in loss ratios to date for accident-year 2012, relative
to the same period in 2011, as earned price increases more than offset
reported claim cost inflation. If this level is maintained through
year-end and as losses develop, it will indicate a reversal from the
estimated 4% deterioration between 2010 and 2011.
CLIPS data are based on both new and renewal business figures obtained
directly from carriers underwriting the business. This particular survey
compared prices charged on policies underwritten during the third
quarter of 2012 to the prices charged for the same coverage during the
same quarter in 2011. For the most recent survey, data were contributed
by 39 participating insurers representing approximately 20% of the U.S.
commercial insurance market (excluding state workers compensation funds).
CLIPS participants represent a cross section of U.S. property & casualty
insurers that includes many of both the top 10 commercial lines
companies and the top 25 insurance groups in the U.S. Measurement of
both pricing changes and loss ratio changes also sets CLIPS apart from
other studies. Participation in CLIPS has been strong, as carriers
believe it provides a more accurate picture of price changes, and find
it useful in setting assumptions for product pricing and estimating
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global professional
services company that helps organizations improve performance through
effective people, risk and financial management. The company offers
solutions in the areas of benefits, talent management, rewards, and risk
and capital management. Towers Watson has 14,000 associates around the
world and is located on the web at towerswatson.com.
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