Towers Watson Survey Reveals Rising Commercial Insurance Prices for Fifth Consecutive Quarter

Flattening loss ratios, deterioration less than 1%

NEW YORK, June 11, 2012 – Commercial insurance prices in aggregate increased by nearly 5% during the first quarter of 2012 – the fifth consecutive quarter that prices rose for all standard commercial lines. In addition, commercial insurers’ loss ratios stabilized for most insurance lines and improved in lines with the largest price increases, according to the most recent Commercial Lines Insurance Pricing Survey (CLIPS) released by global professional services company Towers Watson (NYSE, NASDAQ: TW). The survey compared prices charged on policies underwritten during the first quarter of 2012 to those charged for the same coverage during the same quarter in 2011.

CLIPS data revealed that the largest price increases were once again in workers compensation and commercial property. Workers compensation prices increased for the fifth consecutive quarter, after flat pricing in all of 2010, while commercial property prices rose for the fourth consecutive quarter.

“We are seeing a continuing trend of price-level increases in the commercial insurance marketplace,” said Thomas Hettinger, property & casualty sales and practice leader for the Americas at Towers Watson. “This quarter, the industry reached a significant threshold – an aggregate price increase of nearly 5% – the largest quarterly increase we’ve seen since 2004.”

Price increases were observed across all account sizes for standard commercial lines, with the most significant increases observed in mid-market accounts. Specialty lines lagged, with much more modest increases (less than 2%).

Historical loss cost information reported by participating carriers points to a deterioration of less than 1% in loss ratios for accident-year 2012 data compared with 2011, a more favorable indication than the estimated 3% deterioration between 2010 and 2011. Data from the lines with the largest price increases – workers compensation, commercial property and general/products liability – indicate improving loss ratios.

“We are likely to see improving loss ratios in the near future if this level of price increases and loss trends continues,” said Hettinger. “This would be welcome news for the insurance industry, which has been dealing with low asset returns and significant catastrophe activity for the last few years.”


CLIPS data are based on both new and renewal business figures obtained directly from carriers underwriting the business. This particular survey compared prices charged on policies underwritten during the first quarter of 2012 to the prices charged for the same coverage during the same quarter in 2011. For the most recent survey, data were contributed by 40 participating insurers representing approximately 20% of the U.S. commercial insurance market (excluding state workers compensation funds).

CLIPS participants represent a cross section of U.S. property & casualty insurers that includes many of both the top 10 commercial lines companies and the top 25 insurance groups in the U.S. Measurement of both pricing changes and loss ratio changes also sets CLIPS apart from other studies. Participation in CLIPS has been strong, as carriers believe it provides a more accurate picture of price changes, and find it useful in setting assumptions for product pricing and estimating claim liabilities.

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world and is located on the web at

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