Conning — Property-Casualty Industry Loss Reserve Adequacy Level Barely Changed in 2021; Favorable Development in 2021 Slightly Less than in 2020

Most lines show no change or slight improvement in reserve position; other liability occurrence and commercial auto strengthen again in 2021, but still remain deficient.

HARTFORD, Conn., Sept. 1, 2022 /PRNewswire/ -- Conning's annual study of the property-casualty industry's loss reserves finds that the overall reserve position at year-end 2021 was about the same as it had been at year-end 2020, although there were changes in reserve levels by line of business.

"The property-casualty insurance industry's overall reserve position was unchanged in 2021," said Bill Burns, a Director of Insurance Research at Conning. "Reserves for workers' compensation, CMP, homeowners, other liability (occurrence and claims-made), commercial auto and MPL claims-made were largely unchanged or showed slight improvement in 2021. Meanwhile, reserves for private passenger auto, MPL occurrence and miscellaneous lines are less redundant than at year-end 2020."

"Further," according to Burns, "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. Therefore, if inflation persists, loss development patterns could change, thereby adversely affecting loss reserve adequacy."

The Conning study, "2021 Property-Casualty Loss Reserves: Inflation Looming, No Time for Vacation" reviews the property-casualty industry's loss reserve position at the end of 2021, by line of business and in total. In the study, Conning includes estimated ranges of reserve adequacy levels for the industry and 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 $6.0 billion in 2021, less than the $7.0 billion benefit of prior year development in 2020," said Scott Hawkins, the Head of Insurance Research at Conning. "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."

"2021 Property-Casualty Loss Reserves: Inflation Looming, No Time for Vacation" is available for purchase from Conning by calling (888) 707-1177 or by visiting https://go.conning.com/2022-Loss-Reserves-Study.html.

Conning (www.conning.com) is a leading investment management firm with a long history of serving the insurance industry. Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.

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SOURCE Conning, Inc.