Towers Watson, a global professional services firm, has released a new report showing the rising prices in the commercial insurance industry. The report shows that commercial insurance prices have grown for the second consecutive year by an average of 2%. Property insurance and workers compensation are the two fields where the increases in pricing are most apparent. The property insurance market is being bolstered by a number of natural disasters that occurred throughout the year, which prompted insurers to raise rates and prices for new policies.
While prices are rising, they are not doing so fast enough to keep up with claims. According to the report, the cost of claims throughout the industry has jumped by an average of 4% this year. This is lower than what Towers Watson analysts had expected, but still shows that claims continue to outpace insurers.
Insurance companies are currently embroiled in a battle with state and federal regulators regarding pricing. New regulations in the U.S. have made it more difficult for insurers to raise rates. Insurers that have successful won approval from regulators for rate increases often see consumers move to competitors who have more lenient pricing schemes. Towers Watson notes that the trend may continue well into 2012 and speculate that no major shift in pricing will take place in the U.S. until after 2014, when the Affordable Care Act becomes fully enacted.