Conning’s annual study of the property-casualty industry’s loss reserves finds that the overall reserve position at year-end 2020 was healthier than it was at year-end 2019, although there were changes in reserve levels by line of business.
“The property-casualty insurance industry’s overall reserve position strengthened significantly in 2020, especially in those lines of business most impacted by the Covid-19 pandemic” said Bill Burns, a director, Insurance Research at Conning. “Reserves for private passenger auto, homeowners, workers’ compensation, and miscellaneous lines are much stronger than they were a year ago. It seems that the industry booked higher ultimate losses for accident year 2020 for these lines of business than suggested by the lower loss activity seen in the year. Meanwhile, reserves for other liability and commercial auto liability improved and are less deficient than at year-end 2019.”
The Conning study, 2020 Property-Casualty Loss Reserves: Reserves Strengthen During Lockdown reviews the property-casualty industry’s loss reserve position at the end of 2020, by line of business and in total. In the study, Conning includes estimates of reserve adequacy levels for small, midsized, and large insurance companies. Conning also discloses which companies contributed the largest amounts of favorable and adverse development for each line of business.
“The industry experienced favorable loss development of $7.0 billion in 2020, more than the $5.7 billion benefit of prior year development in 2019,” said Steve Webersen, head of Insurance Research at Conning. “This is the 15th consecutive year of favorable development from prior accident years, with more good news likely to follow in 2021. While the other liability and commercial auto lines remain deficient, rate increases over the last several years have reduced the reserve deficiencies for these lines.”
The study is available for purchase from Conning by calling 888-707-1177 or by visiting www.conningresearch.com.