While aggregate U.S. commercial insurance price hikes continue to moderate, most lines are still producing robust price increases, according to Willis Towers Watson.
Excess/umbrella produces significant price increases during the 2021 second quarter. As well commercial auto, property, and directors and officers liability increases were also near or above double digits, the company’s Q2 2021 Commercial Lines Insurance Pricing Survey (CLIPS) found.
Overall, the aggregate commercial price increase for Q2 was just above 6 percent compared to the same period a year ago, according to the survey. That’s a slowdown from the 8 percent increase in the 2021 first quarter.
“The rate of price increases has moderated again in the second quarter while still elevated versus historical norms. This is largely driven by significantly lower price increases for excess/umbrella and directors and officers liability than previous quarters,” Yi Jing, director, Insurance Consulting and Technology, Willis Towers Watson, said in prepared remarks.
The perpetual outlier continues to be workers’ compensation, which produced a slight price reduction during the quarter. Reported price changes for account sizes were all below double-digit increases except for specialty lines, Willis Towers Watson said.
CLIPS is a retrospective look at historical changes in commercial property & casualty insurance (P&C) prices and claim cost inflation. Data are based on both new and renewal business figures obtained directly from carriers underwriting the business. For this most recent survey, 41 participating insurers representing approximately 20 percent of the U.S. commercial insurance market (excluding state workers compensation funds) contributed data, Willis Towers Watson said.
Meyer Shields, an analyst with Keefe, Bruyette & Woods (KBW), noted that rates are still rising faster than loss trends for almost all commercial lines, although the magnitude of rate increases is slowing.
“Importantly, the flow of business from the standard to the specialty market (which is typical of hard pricing phases) continues, reflecting sustained underwriting discipline and probably the ongoing economic recovery, since new businesses without premium-and loss histories often initially find coverage in the specialty markets,” he wrote in an analysis after the IVANS index and KBW’s 2021 P&C conference.
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