According to the latest insurance spending report from Towers Watson, commercial insurance prices rose just 3% in the second quarter of 2014, following several quarters that saw increases over 6%.
The result continues a price moderation trend that has been in place for commercial lines since mid 2013, Towers Watson said.
“Carriers are reporting loss ratios for 2013 and 2014 that benefit from 2012 and 2013 price levels,” said Alejandra Nolibos, director in Towers Watson's property & casualty business. “Now they are seeing a continuation of low loss cost trends and no lack of capital in the market, which may be leading to the slowdown in price increases. In particular — and consistent with the availability of capital through abundant reinsurance capacity — property rates are dropping sharply.”
True, according to the report, commercial property insurance prices declined for the first time in three years last quarter, marking the first time since 2011 that any of the firm's surveyed lines showed a quarterly decrease. Over half of all commercial property respondents reported price decreases in Q2, Towers Watson said.
On the upside, employment practices liability saw the largest price incrsed, followed by commercial auto. Workers' compensation prices were up in the quarter as well, but less so than this time last year
“The survey noted that loss ratios improved 2% for accident-year-to-date 2014 relative to the same period in 2013 (excluding catastrophes), as earned price increases continued to offset claim cost inflation,” the report read. “This development builds on the estimated loss ratio improvement of nearly 6% between 2012 and 2013. In aggregate, carriers reported approximately flat claim cost inflation for 2013 and more than 2% for year-to-date 2014.”
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