US Insurance Prices Increased Significantly during Fourth Quarter

US commercial insurance prices once again experienced significant growth in the fourth quarter of 2020, according to Willis Towers Watson's (WTW) Commercial Lines Insurance Pricing Survey (CLIPS).

The WTW survey compared prices charged on policies underwritten during the fourth quarter of 2020 with those charged for the same coverage during the same quarter in 2019, finding that the aggregate commercial price change reported by insurers was more than 10 percent, the highest increase in the history of CLIPS.

WTW said that data for nearly all insurance lines showed significant price increases in the fourth quarter. The largest increases were for excess/umbrella liability and directors and officers liability. Workers compensation remains an outlier, WTW said, showing a slight price reduction in contrast with all other surveyed lines.

The fourth quarter survey showed price changes across most insurance lines were consistent with increases in the third quarter, differing by account sizes. While changes for small accounts were "muted," according to WTW, price increases for middle market accounts were in the double digits, and those for large accounts were well into double digits.

Claim cost trends from surveyed data showed that loss ratios (excluding for catastrophes) for 2020 project to be lower than 2019 across all surveyed lines except workers compensation, WTW said.

"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," Yi Jing, director, insurance consulting and technology, Willis Towers Watson, said in a statement. "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."