In an indication that the market may be hardening, commercial insurance prices in aggregate increased by nearly 1.5% during the second quarter of 2011 — the first time since the fourth quarter of 2003 that all standard commercial lines showed an uptick in pricing — according to global professional services company Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS).
It appears to be the largest increase since Q3 2004. There were increases in all standard lines. Workers comp has been rising for three consecutive quarters. Commercial property rates rose for the first time in a year. D&O prices fell sharply.
There were increases in all account sizes, but middle-market and large accounts rose the most.
Towers survey continues to show the importance of predictive modeling:
Results indicate that companies that use predictive modeling for pricing/risk tiering and risk selection are achieving greater price increases than those that do not, consistent with surveyed results from second quarter 2010. More than 50% of reported premium volume corresponds to companies reporting use of predictive modeling for pricing/risk tiering, and more than 30% corresponds to carriers reporting use of predictive modeling for risk selection.