A fragile global economy, excess capacity in virtually every line of commercial insurance and a quiet 2009 catastrophe year combined to keep commercial insurance prices flat during the first quarter of 2010, according to Towers WatsonÃ¢â‚¬â„¢s most recent Commercial Lines Insurance Pricing Survey (CLIPS).
The latest results mark the fifth consecutive quarter of little or no price increases after nearly five years of steady decreases.
Data for most lines indicate flat or small increases in prices, offset by price reductions in commercial property, directors and officers liability (D&O), and employment practices liability (EPL), according to Towers Watson.
Looking at D&O, it observed that price increases seen in the past year due to the financial crisis have disappeared, and pricing seems to be reverting back to pre-crisis levels.
CLIPS preliminary findings also indicate that accident year to date 2010 loss ratios deteriorated 5 percent relative to year to date 2009. Early estimates of claim costs through the first quarter point to somewhat higher inflation than that observed in 2009, which contributes to the larger loss ratio deterioration.
The Towers Watson survey compared prices charged on policies underwritten during the first quarter of 2010 to the prices charged for the same coverage during the same quarter in 2009. Survey data were contributed by 37 participating insurers, representing approximately 20 percent of the commercial insurance market (excluding state workers compensation funds).
Its findings come just a week after the latest market barometer from online insurance exchange MarketScout revealed the premium and corresponding rates for all lines of commercial property and casualty business in the United States were down three percent in May 2010.