Madison, NJ, March 20, 2020 – After 14 consecutive year of reserve releases, the research firm sees red ink ahead.

Assured Research released its annual P/C Industry Reserve Study on March 17^th. And for the first time since it began conducting comprehensive reserve studies, the research firm has concluded that the P/C industry’s net reserve position is about $6 billion short.

“$6 billion may seem like a big number, but it’s not.” said William Wilt, Assured Research President. He continued, “At less than 1% of carried reserves that number is not actuarially significant. But what’s important,” he added, “is the change in our reserve position since last year when we still saw material redundancies.”

In its report, which is available to interested parties, the P/C-focused research firm measured material changes in reserve positions across a few liability lines. According to Alan Zimmermann, a Managing Director at Assured, “The change from past years, particularly across the general and professional liability lines, is important because it comes against a darkening underwriting backdrop that is colored by the emergence of nuclear jury verdicts and social inflation.”

The study examines the actuarial trends driving the adverse development across these liability lines while also diving into two lines that are surprising only insofar as they tell the same story year after year. “Broadly, workers’ compensation insurers are still over reserved, and commercial auto writers are under reserved,” said Mr. Wilt.

Turning to what these findings could mean for the hardening P/C pricing cycle now underway, the authors suggest that the emergence of reserve deficiencies could act as a catalyst for further rate increases throughout 2020. In recognition of a potentially severe economic slowdown, however, Assured Research notes that it could prove difficult for insurers to raise prices into 2021 if their full-year 2020 results show an improvement over the prior year. “It’s one thing to raise prices on policyholders when their business are booming”, said Mr. Zimmermann, “quite another to demonstrate pricing power when your customers have suffered a severe drop in demand.”

Assured Research is dedicated to producing substantive and actionable research for Property/Casualty insurance and investment professionals. In addition to subscription research, the firm offers bespoke research and educational services to subscribers.

A copy of its 2019 Industry Reserve Analysis can be requested by contacting the firm through its website.

Media Contact:
Bill Wilt
william.wilt@assuredresearch.com
973.377.3908