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Reports Question Industry’s Reserve Strength, Recent Accident-Year Releases

Analysts agree that a drop in P&C reserve releases is inevitable as years of soft-market pricing catch up with loss realitiesand one report questions 2011 releases from recent accident years for longer-tail commercial lines.

By Mark E. Ruquet | Updated on June 18, 2012
Analysts agree that a drop in P&C reserve releases is inevitable as years of soft-market pricing catch up with loss realities—and one report questions 2011 releases from recent accident years for longer-tail commercial lines.

A string of recent reports indicates that while strong reserve releases are continuing for the time being, the industry is close to depleting its reserve cushion.

Based on figures from the National Association of Insurance Commissioners (NAIC) and aggregated by SNL Financial, Aon Benfield performed an actuarial study of company reserve releases and estimates that insurers will release between $7 billion and $10 billion this year to bolster current-year results, which will eliminate remaining reserve redundancy.

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