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Survey shows that Q4 2020 U.S. commercial insurance prices have achieved the highest increase since the inception of CLIPS in 2003

Willis Towers Watson’s Q4 Commercial Lines Insurance Pricing Survey again indicates significant upward price adjustments for multiple lines...

U.S. commercial insurance prices again grew significantly in the fourth quarter of 2020, according to Willis Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS). The survey compared prices charged on policies underwritten during the fourth quarter of 2020 to those charged for the same coverage during the same quarter in 2019. The aggregate commercial price change reported by carriers grew by almost 5% in the third quarter of 2019, over 6% for the 4th quarter of 2019 and first quarter of 2020, and then spiked upward to nearly 10% in the second and third quarters and now above 10% in the fourth quarter.

Line of business price changes

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, as both coverages saw significantly accelerating prices over the previous six quarters. Commercial auto saw reported price increases near or above double digits for the thirteenth consecutive quarter, while commercial property coverage accelerated again and saw near or above double digit increases for the seventh consecutive quarter. Price changes for most lines were fairly consistent with the price increases in the third quarter with commercial property and excess/umbrella liability showing the largest changes versus the third quarter. Directors and officers liability data had been indicating modest price increases for all of 2018, with sharp adjustments upward in the past eight quarters. CLIPS indicates a slight price reduction for workers compensation, in contrast to all other surveyed lines, though the decreases have tempered somewhat for each of the last eight quarters.

Account size price changes

When comparing account sizes, reported price changes were more muted for small commercial accounts, into double digits for mid-market accounts, and well above double digits for large accounts, whereas the prices were fairly consistent by account size six quarters ago. Specialty lines price increases in aggregate were well into double digits, driven by directors and officers and medical professional liability lines.

Willis Towers Watson’s Q4 Commercial Lines Insurance Pricing Survey again indicates significant upward price adjustments for multiple lines.

U.S. commercial insurance prices again grew significantly in the fourth quarter of 2020, according to Willis Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS). The survey compared prices charged on policies underwritten during the fourth quarter of 2020 to those charged for the same coverage during the same quarter in 2019. The aggregate commercial price change reported by carriers grew by almost 5% in the third quarter of 2019, over 6% for the 4th quarter of 2019 and first quarter of 2020, and then spiked upward to nearly 10% in the second and third quarters and now above 10% in the fourth quarter.

Line of business price changes

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, as both coverages saw significantly accelerating prices over the previous six quarters. Commercial auto saw reported price increases near or above double digits for the thirteenth consecutive quarter, while commercial property coverage accelerated again and saw near or above double digit increases for the seventh consecutive quarter. Price changes for most lines were fairly consistent with the price increases in the third quarter with commercial property and excess/umbrella liability showing the largest changes versus the third quarter. Directors and officers liability data had been indicating modest price increases for all of 2018, with sharp adjustments upward in the past eight quarters. CLIPS indicates a slight price reduction for workers compensation, in contrast to all other surveyed lines, though the decreases have tempered somewhat for each of the last eight quarters.

Account size price changes

When comparing account sizes, reported price changes were more muted for small commercial accounts, into double digits for mid-market accounts, and well above double digits for large accounts, whereas the prices were fairly consistent by account size six quarters ago. Specialty lines price increases in aggregate were well into double digits, driven by directors and officers and medical professional liability lines.

 

  

 Change in price level vs. same quarter one year prior

 

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