U.S. commercial insurance prices again increase significantly during Q4 2020
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Highest increase since inception of CLIPS in 2003
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ARLINGTON, Va., March 08, 2021 (GLOBE NEWSWIRE) -- 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.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) 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 45,000 employees serving more than 140 countries and markets. 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.
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. P&C insurers that includes many of the top 10 commercial lines companies and the top 25 insurance groups in the U.S. This survey compared prices charged on policies written during the fourth quarter of 2020 with the prices charged for the same coverage during the same quarter of 2019. For this most recent survey, 38 participating insurers representing approximately 20% of the U.S. commercial insurance market (excluding state workers compensation funds) contributed data.
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