Commercial Insurance Prices Increase for the Ninth Straight Quarter


Commercial Insurance Prices Increase for the Ninth Straight Quarter

All commercial lines show price changes of at least 4%

NEW YORK--(BUSINESS WIRE)-- Insurance carriers continue to report increases in commercial insurance prices, almost 7% in aggregate during the first quarter of 2013, according to the Commercial Lines Insurance Pricing Survey (CLIPS) conducted by Towers Watson (NYSE, NASDAQ: TW), a global professional services company. The results of the current edition of this survey mark over two years of consecutive overall price increases and the fifth quarter of increases across every one of the lines surveyed. The survey compared pricing for coverage purchased during the first quarter of 2013 to that of the same quarter in 2012 as reported by participating carriers.

Overall price changes are consistent with the results of the two prior surveys, with pricing for each line of business increasing by at least 4%. Among the survey's key takeaways:

  • Even with evidence of a slight deceleration in price gains, workers compensation and employment practices liability showed the largest price increases.

  • Pricing increases for professional liability saw a moderate acceleration, which in turn pushed similar increases in aggregate specialty line price indicators.

  • Small account pricing gains accelerated slightly, almost to the level of large accounts, for which price increases moderated during the first quarter. Mid-market account price changes remained relatively stable.

  • Insureds purchasing property coverage in the first quarter saw price increases in the mid-single digits.

"Interestingly, pricing for property grew only modestly, with less movement than might have been expected considering losses related to Hurricane Sandy," said Tom Hettinger, Towers Watson's Property & Casualty sales and practice leader for the Americas. Hettinger also noted, "That is not surprising, as there is plenty of reinsurance capacity out there."

"Capacity has definitely increased for property reinsurance, as mainstream investors are joining specialists in the search for yields, specifically through alternative investments such as catastrophe bonds and collateralized reinsurance," said Bob Betz, Florida practice leader of Towers Watson's Brokerage business. "June renewals of Florida personal lines business are an example of additional capacity significantly lowering prices on a risk-adjusted basis. We see reductions of 15% to 20%, and even more in isolated cases."

Historical loss cost information reported by participating carriers points to a very preliminary improvement in loss ratios in the first quarter relative to the same period in 2012 (excluding any identified catastrophes), as earned price increases more than offset reported claim cost inflation. This builds on the estimated improvement of more than 2% between 2011 and 2012, which comes from both the earning of price increases and lower claim cost inflation.


CLIPS data are based on both new and renewal business figures obtained directly from carriers underwriting the business. 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. This particular survey compared prices charged on policies underwritten during the first quarter of 2013 to the prices charged for the same coverage during the same quarter in 2012. For the most recent survey, data were contributed by 40 participating insurers representing approximately 20% of the U.S. commercial insurance market (excluding state workers compensation funds).

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

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