The commercial insurance marketplace in the United States continued to harden during the third-quarter of the year, with the latest analysis from broker Willis Towers Watson stating that property rates continued to accelerate during the period.
Insurance and reinsurance broker Willis Towers Watson said that its latest survey of commercial lines pricing shows a near 10% price change for the entire marketplace, across all lines of business.
Comparing prices charged on commercial insurance policies underwritten during Q3 2020 to those charged for the same coverage and quarter in 2019, Willis Towers Watson (WTW) found the aggregate price change reported by carriers was near 10% for the second consecutive quarter.
Again, as we’ve explained before, it is the mid to large accounts that are seeing the fastest rate increases, with price changes for mid-market accounts close to double digits and large accounts seen as moving well into the double digit range, WTW said.
“While commercial insurance prices continued to rise this quarter at a significant rate, CLIPS data indicate the acceleration in prices observed in recent quarters stabilized somewhat,” said Yi Jing, director, Insurance Consulting and Technology, Willis Towers Watson. “The price change level holding steady occurs despite the tethering impact of past workers compensation price reductions waning.”
Price changes for almost all lines were comparable with the previous quarter, WTW explained, but property is one are of continued price improvement it seems.
“Property coverage accelerated again and saw near or above double digit increases for the sixth consecutive quarter,” the broker explained.
Once again, these accelerations in commercial property insurance rates, particularly in the larger accounts, suggest reinsurance rates should also continue to firm, or at least remain firm, in particular in property catastrophe zones.
This will continue to make commercial and large property insurance accounts an increasingly attractive source of risk for ILS funds that like to get closer to the source of the risk, or simply for the way these higher prices read across into property treaty reinsurance looking forwards.
It seems there is a much more sustained firming of pricing in the commercial insurance market this year, not just being affected by capital availability.
As primary carriers look to recover from years of elevated combined ratios, by accelerating pricing in certain lines, the knock-on effect should be a more sustained ability for reinsurance pricing to also remain elevated at current levels, as long as discipline continues in the marketplace.