U.S. commercial insurance prices again grew significantly in the fourth quarter of 2020, according to leading global advisory, broking and solutions company Willis Towers Watson’s Commercial Lines Insurance Pricing Survey (CLIPS). 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 in the history of CLIPS.
Data for nearly all lines indicated significant price increases in the fourth quarter with the largest increases coming from excess/umbrella liability and directors’ and officers’ liability. The outlier continues to be workers compensation, which indicated a slight price reduction, in contrast with all other surveyed lines. Price changes for most lines were consistent with the increases in the third quarter survey and differed by account sizes with small accounts muted, mid-market accounts into double digits and large accounts well into double digits.
Claim cost trends from the surveyed data indicated that loss ratios (excluding catastrophes) for accident year 2020 project 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,” said Yi Jing, director, Insurance Consulting and Technology, Willis Towers Watson. “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.”
CLIPS is a retrospective look at historical changes in commercial property & casualty insurance (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 Insurance Marketplace Realities series.