U.S. commercial insurance prices showed an aggregate increase above 6%

U.S. commercial insurance prices grew again in the fourth quarter of 2023, according to WTW’s most recent Commercial Lines Insurance Pricing Survey (CLIPS). The survey compared prices charged on policies underwritten during the fourth quarter of 2023 to those charged for the same coverage during the same quarter in 2022. The aggregate commercial price changes reported by carriers spiked upward to nearly and above 10% in the second through fourth quarters of 2020; since then, the price change has started declining – to just below 5% in the fourth quarter of 2022 but then increasing back to above 5% in the first quarter of 2023 and now to above 6% in the fourth quarter of 2023.

Line-of-business price changes

Data for nearly all lines continue to indicate the moderate to significant price increases in the fourth quarter with the exception of workers compensation, directors' and officers' liability, and cyber. CLIPS continues to indicate a slight price reduction for workers compensation. Directors' and Officers' liability saw another quarter of price decrease but, again, less than the prior quarter. The largest price increase came from commercial auto liability, which saw a reported price increase near or above double digits for 25 consecutive quarters. The second largest price increase came from commercial property, which continued to see a double-digit price increase, although slightly lower than the prior quarter. Excess/umbrella liability, which saw significantly accelerating prices over the previous 18 quarters, continued to see a slightly higher increase than the prior quarter. Cyber, after having reported significant rate increases in 2021 through the third quarter of 2022, continued to show a slowdown in its price change with a similar price decrease to the prior quarter.

Account size price changes

When comparing account sizes, reported price increases for small, mid-market and large accounts were all higher than the prior quarter. Specialty lines essentially had a flat rate change, where professional liability and employment practice liability generally showed rate increases offset by rate decreases experienced in directors' and officers' liability.

CLIPS data point to flat loss ratio movement for 2022 and a modest improvement of 2% for 2023. Insurers indicate 2% claim cost inflation for 2023, which is below the earned price increase of just above 6% realized during the year.