U.S. commercial insurance premiums rose again in the third quarter of 2023, according to WTW's latest Commercial Insurance Pricing Study (CLIPS). The study compared prices for insurance written in the third quarter of 2023 with prices charged for the same coverage in the same quarter of 2022. Total commercial premiums reported by insurers surged nearly 10% from Q2 to Q4 2020. They then fell to just under 5% in Q4 2022, before rising again to over 5% in Q1 2023 and just over 6% in Q2 and Q3 2023.
Line of business price changes
In Q3 2023, data for nearly all lines continues to show moderate to significant price increases, except for Workers Compensation, Directors & Officers Liability, and Cyber. CLIPS continues to show slight price declines for Workers Compensation. Directors & Officers Liability saw another quarterly price decline, but still lower than last quarter. Commercial real estate continued to see double-digit price increases, although slightly lower than last quarter.
The second largest price increase in Q3 2023 continued to be driven by excess/umbrella liability insurance, which saw a significantly larger price increase than in the past 17 quarters and a slightly higher double-digit increase than last quarter. Commercial auto insurance reported a near double-digit or higher price increase for the 24th consecutive quarter. Cyber, which was introduced to the survey for the first time in Q4 2021 and at a much lower volume than all other lines, continued to show slower price volatility, with a slightly lower price decrease than last quarter.
Account Size Pricing Change
Comparing account size, small, mid-size and large accounts reported price changes below double digits. Specialties essentially saw flat rate changes in fees, while professional liability and employment practices liability insurance saw rate increases offset by rate declines experienced in directors and officers insurance.