In an indication that the market may be hardening, commercial insurance prices in aggregate increased by nearly 1.5 percent during the second quarter of 2011. It's the first time since the fourth quarter of 2003 that all standard commercial lines showed an uptick in pricing.

That is a key finding from the most recent Commercial Lines Insurance Pricing Survey (CLIPS) by global professional services company Towers Watson, which said the findings are consistent with preliminary results from a soon-to-be released Towers Watson survey that 75 percent of chief financial officers believe standard property market prices were at the bottom or turning upward.

Further, while 87 percent of the CFOs believe the casualty market is still soft or at the bottom of the cycle, 80 percent of these CFOs said it is within two years of hardening.

Findings from CLIPS indicate the price increase was led by workers' compensation, which continued the trend of pricing increases that began in the first quarter of this year, and commercial property, which increased for the first time in more than a year.

While price increases were observed across all account sizes for standard commercial lines, they were more pronounced in mid-market and large accounts.

"It is too early to definitively call this a hardening market, but CLIPS results and the outlook of CFOs are pointing in that direction," said Bruce Fell, managing director of Towers Watson's property/casualty practice in the Americas. "Commercial property prices were likely influenced by catastrophes earlier in the year and the level of price increases is not enough to avoid continued increases in loss ratios. However, it is significant that all of the standard lines of business indicated increases in the second quarter. We believe the third and fourth quarter indications will provide a more complete view of the industry's direction."

The survey compared prices charged on policies underwritten during the second quarter of 2011 to the prices charged for the same coverage during the same quarter in 2010. Survey data were contributed by 38 participating insurance companies representing approximately 20 percent of the U.S. commercial insurance market (excluding state workers' compensation funds).

Historical loss cost information reported by participating carriers points to a 3 percent deterioration in loss ratios in the first half of 2011 relative to the same period in 2010. This preliminary indication is similar to the estimated level of deterioration for the full accident-year 2010 loss ratio over 2009 of nearly 4 percent.

CLIPS data are based on both new and renewal business figures obtained directly from carriers underwriting the business. This particular survey compared prices charged on policies underwritten during the second quarter of 2011 to the prices charged for the same coverage during the same quarter in 2010.