Survey shows that Q3 2020 U.S. commercial insurance prices increase nearly double digits

U.S. commercial insurance prices again grew significantly in the third quarter of 2020, according to Willis Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS). The survey compared prices charged on policies underwritten during the third quarter of 2020 to those charged for the same coverage during the same quarter in 2019. The aggregate commercial price change reported by carriers grew by almost 5% in the third quarter of 2019, over 6% for the 4th quarter of 2019 and first quarter of 2020, and then spiked upward to nearly 10% in the second and third quarters.

Line of business price changes

Data for nearly all lines indicated significant price increases in the third quarter, with the largest coming from excess/umbrella liability and directors and officers liability, as both coverages saw significantly accelerating prices over the previous five quarters. Commercial auto saw reported price increases near or above double digits for the twelfth consecutive quarter, while property coverage accelerated again and saw near or above double digit increases for the sixth consecutive quarter. Price changes for nearly every line were fairly consistent with the price increases from the second quarter. Directors and officers liability data had been indicating modest price increases for all of 2018, with sharp adjustments upward in the past seven quarters. CLIPS indicates modest price reductions for workers compensation, in contrast to nearly all other surveyed lines, though the decreases have tempered somewhat for each of the last seven quarters.

Account size price changes

When comparing account sizes, reported price changes were more muted for small commercial accounts, near double digits for mid-market accounts, and well above double digits for large accounts, whereas the prices were fairly consistent by account size five quarters ago. Specialty lines price increases in aggregate were well into double digits, driven by directors and officers and medical professional liability lines.

Change in price level vs. same quarter one year prior