Insurer reserves deficient despite higher prices: Analysis
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U.S. commercial lines insurers' reserves are deficient despite continued rate increases, reinsurance intermediary Aon Benfield said in an analysis released Thursday.
According to the report, “U.S. P&C Industry Statutory Reserve Study,” U.S. commercial lines insurers moved to an overall deficient position as reserves decreased in the commercial liability, workers compensation and financial guarantee categories. Only property lines increased the redundancy of their reserves in 2012 according to the analysis by the the Aon P.L.C. unit.
“Commercial lines reserves, which were redundant at year-end 2011, have now swung to a deficient position of almost $0.9 billion at year-end 2012, and continued reserve releases of approximately $1.6 billion in the first quarter of 2013 have increased pressure on this segment,” Brian Alvers, chief actuary for Aon Benfield Americas, said in a statement.
“Rates in commercial lines sector of the insurance industry have been rising for the last eight to nine quarters, and the lack of reserve cushion should continue to fuel a hardening market in the commercial lines sector,” he said.
