Property-Casualty Industry Reserves Were Largely Unchanged in 2021
September 02, 2022
An annual study of the property-casualty insurance industry's loss reserves found little change in the industry's overall reserve position from 2020 to 2021.
However, the study by Conning did find changes in reserve levels by lines of business.
The Conning study, "2021 Property-Casualty Loss Reserves: Inflation Looming, No Time for Vacation," reviews the property-casualty insurance industry's loss reserve position at the end of 2021 by line of business and in total. The study includes estimated ranges of reserve adequacy levels for the industry and for small, midsized, and large insurance companies.
"The property-casualty insurance industry's overall reserve position was unchanged in 2021," Bill Burns, a director of Insurance Research at Conning, said in a statement. He noted that reserves for lines including workers compensation, commercial multiple peril, and commercial auto were largely unchanged or showed a slight improvement in 2021.
"While inflation was not yet a major factor at the end of 2021, when the losses in this study were evaluated, inflation has since become a driver of higher claim costs," Mr. Burns said. "Therefore, if inflation persists, loss development patterns could change, thereby adversely affecting loss reserve adequacy."
"The industry experienced favorable loss development of $6.0 billion in 2021, less than the $7.0 billion benefit of prior year development in 2020," Scott Hawkins, head of Insurance Research at Conning, said in the statement. "This is the sixteenth consecutive year of favorable development from prior accident years, with more good news likely to follow in 2022. While reserves for the other liability and commercial auto lines remain deficient, rate increases over the last several years have reduced the reserve deficiencies for these lines."
September 02, 2022