Commercial insurance prices in the U.S. increased by nearly 3% during the second quarter of 2018, according to leading global advisory, broking and solutions company Willis Towers Watson’s Commercial Lines Insurance Pricing Survey (CLIPS). Price changes of this magnitude have not been reported in almost four years. The survey compared prices charged on policies written during the second quarter of 2018 with those charged for the same coverage during the equivalent quarter in 2017.
Price changes for nearly all lines were higher in the second quarter compared to those reported in the first quarter of 2018. Commercial auto, commercial property and excess/umbrella liability all indicated material price increases. Commercial property price data, which had been showing small price decreases recently, now shows increases in the low- to mid-single digits for the third consecutive quarter. Commercial auto continues to be the outlier, with meaningful price increases at or near double digits for the third consecutive quarter. CLIPS data indicate that workers compensation is the only standard surveyed line with ongoing price reductions.
When comparing the survey results by account size, price changes were positive and nearly identical across all segments, as mid-market and large account commercial price change data caught up to the recently larger increases reported for small accounts.
“Almost all lines show a more rapid pace of price increases,” said Ben Williams, director, pricing, product, claims and underwriting practice, North America, Willis Towers Watson. “Notably, mid-market and large accounts prices have recently seen the largest increases. This is fodder for thought, as the history of CLIPS suggests that larger accounts have been leading indicators of market adjustments.”
CLIPS is a retrospective look at historical changes in commercial P&C prices and claim cost inflation. A forward-looking analysis of commercial P&C trends, outlook and rate predictions can be found in Willis Towers Watson’s Marketplace Realities series.
About Willis Towers Watson
Willis Towers Watson is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has over 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.
About CLIPS
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 the top 10 commercial lines companies and the top 25 insurance groups in the U.S. This particular survey compared prices charged on policies written during the second quarter of 2018 with the prices charged for the same coverage during the same quarter of 2017. For the most recent survey, 37 participating insurers representing approximately 20% of the U.S. commercial insurance market (excluding state workers compensation funds) contributed data.