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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Commercial Insurance Prices Increased Significantly in First Quarter

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June 09, 2020

US commercial insurance prices increased significantly in the first quarter of the year, with the aggregate price change reported by insurers exceeding 6 percent for the second consecutive quarter, according to Willis Towers Watson's Commercial Lines Insurance Pricing Survey (CLIPS).

In comparison, the aggregate commercial insurance price change was close to 2 percent for all four quarters of 2018 and the first quarter of 2019, according to Willis. Aggregate pricing reached almost 4 percent in the second quarter and nearly 5 percent in the third quarter before hitting 6 percent in the fourth quarter.

The broker reported that data for nearly all lines of insurance coverage indicated price increases, some significant, with double-digit increases for directors and officers liability, excess/umbrella, commercial auto, and property.

First-quarter price changes varied by account size, according to Willis, with more modest increases for small commercial accounts and greater increases for midmarket accounts and increases for large accounts nearing double digits.

CLIPS found continued decreases in workers compensation prices, though the decreases have moderated in each of the last five quarters.

"Focusing on workers compensation, carriers reported reductions once again. That said, first-quarter statistics are unlikely to reflect reactions to the short and midterm impacts of COVID-19, among them changes in task and employment mix and the economic situation," Alejandra Nolibos, senior director, Insurance Consulting and Technology, at Willis Towers Watson, said in a statement. "Ongoing analyses of detailed data on emergence and exposures, coupled with carriers' outlooks for the environment and a refreshed interest in the role of systemic events in this class, will be important determinants of premium trends in the future."

CLIPS is a retrospective look at historical changes in commercial property-casualty insurance prices and claim cost inflation.

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