View this article online: https://www.claimsjournal.com/news/national/2009/03/16/98756.htm
The commercial lines insurance market showed more signs of price stabilization in the last quarter of 2008.
Commercial insurance prices saw just a slight decline of 3 percent during the fourth quarter of 2008 compared to the same quarter a year ago — representing the smallest reduction in the past eight quarters — according to Towers Perrin’s most recent commercial lines insurance pricing and profitability trends survey (CLIPS).
Fourth quarter CLIPS findings indicate that product lines and market segments experiencing the greatest reductions in pricing over the last few years — most notably workers’ compensation, property and large accounts — may have begun to stabilize.
The survey also revealed that pricing reductions in those areas are now generally in line with activity in other commercial lines, with the exception of specialty lines, where, consistent with recent quarters, price changes remained fairly flat.
The survey also show that accident-year 2007 loss ratios deteriorated 7 percent relative to 2006, and that accident-year 2008 loss ratios rose an additional 12 percent versus 2007. The deterioration is a continuation of a five-year trend as, overall, prices have eased 11 percent since 2004, despite ongoing increases in loss inflation.
“The underlying deterioration in underwriting results, coupled with unprecedented investment losses, are contributing to a slowing of pricing declines,” said Jeanne Hollister, Towers Perrin managing principal and property and casualty insurance practice leader for the Americas region. “Although the property and casualty industry remains strongly capitalized in the aggregate, we expect that the surplus declines in 2008 will result in increased conservatism in companies’ risk appetite. We believe that this, in turn, will lead to a gradual, general firming of prices throughout the balance of 2009.”
Towers Perrin’s CLIPS data are based on both new and renewal business figures — when available — obtained directly from carriers underwriting the business. CLIPS participants represent a cross section of U.S. P/C insurers that include many of both the top 10 commercial lines companies and the top 25 insurance groups in the U.S. The survey results track the differing trends in pricing across region, line of business, and account size on a quarterly basis. Historically, price level and loss ratio change results vary considerably by line of business and market segment.
Source: Towers Perrin,
www.towersperrin.com