US commercial insurance prices still increasing, says Willis Towers Watson

US commercial insurance prices have seen the highest increase for nearly 20 years, according to Willis Towers Watson’s (WTW) Commercial Lines Insurance Pricing Survey (CLIPS) 2020 Q4. All lines, with the exception of workers compensation, saw significant price increases in the fourth quarter, and large accounts saw the biggest increases. The survey compared prices charged on policies underwritten during the fourth quarter of 2020 with those charged for the same coverage and quarter in 2019, and found the aggregate commercial price change reported by carriers was above 10%, the highest increase since the inception of CLIPS in 2003. The increase continues the trend seen in the last year or more. According to WTW: “The aggregate commercial price change reported by carriers grew by almost 5% in the third quarter of 2019, over 6% for the fourth quarter of 2019 and first quarter of 2020, then spiked upward to nearly 10% in the second and third quarters, and is now above 10% in the fourth quarter.” The largest increases were coming from excess/umbrella liability and directors and officers (D&O) liability, says WTW, noting that both coverages saw significantly accelerating prices over the previous six quarters. Commercial auto saw reported price increases near or above double digits for the 13th consecutive quarter, while commercial property coverage accelerated again and saw near or above double-digit increases for the seventh consecutive quarter, the survey found. “Price changes for most lines were fairly consistent with the price increases in the third quarter, with commercial property and excess/umbrella liability showing the largest changes versus the third quarter. D&O liability data had been indicating modest price increases for all of 2018, with sharp adjustments upward in the past eight quarters,” the report reveals. WTW explains that the outlier continues to be workers compensation, which indicated a slight price reduction, in contrast with all other surveyed lines, though the decreases have tempered somewhat for each of the last eight quarters. The report notes that claim cost trends indicate that loss ratios (excluding catastrophes) for accident year 2020 are projected to be lower than 2019 across all surveyed lines except workers compensation. “Commercial insurance prices continued their rise during the fourth quarter and even exceeded double-digit increases, marking the highest rate in the four quarters of 2020,” commented Yi Jing, director, insurance consulting and technology, WTW. “These significant price change levels occurred despite rate decreases for workers compensation, for which prices are now flattening after the last 22 quarters of rate decreases.” Reported price changes were more muted for small commercial accounts, according to WTW, with double-digit increases for mid-market accounts, and well above double digits for large accounts. This compares to six quarters ago when the prices were fairly consistent. The broker adds that specialty lines price increases in aggregate were well into double digits, driven by D&O and medical professional liability lines.

US commercial insurance prices still increasing, says Willis Towers Watson

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