New analysis by investment management firm Conning shows that the property and casualty (P&C) industry’s overall loss reserve positioned strengthened during global lockdowns last year, ending 2020 in a better position than the previous year.
Reserves for private passenger auto, homeowners, workers’ compensation, and miscellaneous lines in particular were found to be much stronger than they were a year ago, according to Conning’s study.
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 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.
“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” added Steve Webersen, Head of Insurance Research at Conning.
“This is the fifteenth 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.”