During the first quarter of 2014, researchers found that commercial liability insurance prices rose by nearly five percent. A survey was conducted by Towers Watson to compare prices for different underwritten policies at different points in time. While prices kept growing, the increases noted were the smallest researchers had seen in about two years. They said their finding was one percentage point lower than the prior quarter’s. During the last two quarters of 2012 and the first two quarters of 2013, percentages analyzed by researchers were between six percent and seven percent.
While prices rose for all business lines, the most significant raises amounted to low and mid-single digits. Aside from professional liability insurance, fourth quarter increases were higher than those in the previous quarters. The largest price increase from year to year was with employment practices liability coverage. However, commercial auto and umbrella coverage both experienced significant increases. Large, mid-market, and small accounts did not have substantial differences, and the price increase for specialty pricing increased slightly.
Survey participants reported loss ratios with improvements of about two percent for year-to-date accident coverage from the prior year. Carriers reported an aggregate inflation of about two percent for cost inflation in 2014 and one percent in 2013. Experts concluded that price increases continued to decline after experiencing a moderate but steady decline over time. However, they also noted that price increases have resiliency with the market focus being on inflationary environment uncertainty, risk management and fixed-income investments that still remain low. In ending, they said that price increases are still exceeding the rate of claim inflation even though they are mitigating.
Survey data for this research project is based on renewal and new business figures that are taken from underwriting carriers. The survey’s participants included insurers in the United States in casualty and property categories. This included the top 25 insurance groups and the top 10 commercial lines in the country. More than 40 insurers total participated in the survey, and their reach totaled about 20 percent of the commercial insurance market in the United States. It is important for all companies using commercial insurance to stay current with what is happening and to understand why costs change. This helps them know what to expect in the future to some point.
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