Property/casualty insurer impairments hit several lines
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More than 300 property/casualty insurers became impaired between 2000 and 2015, according to an A.M. Best Co. Inc. report.
Workers compensation and personal were the primary lines of business affected among the 337 impaired insurers, Oldwick, New Jersey-based Best said in its 2015 Property/Casualty Impairments Update, issued Thursday.
Best defines impairment as a situation in which a company has been placed via court order into conservation, rehabilitation and/or insolvent liquidation.
Of the 323 insurers for which lines of business were identified, workers compensation was the leading line of business for 28%, while personal lines accounted for another 28%.
Commercial lines insurers accounted for 22% of the impairments, split between other liability/commercial multiperil, at 15%, and commercial auto, at 7%.
The remaining 22% of impairments were split among specialty lines, according to report.
Of the 90 impairments for which specific casual factors were identified, the leading specific cause was fraud or alleged fraud, which accounted for 22 of the total, while 21 impairments related primarily to affiliate problems.
Catastrophe losses, largely in Florida and Texas, caused 18 impairments, while 16 companies suffered impairments after experiencing rapid growth. Investment losses were a significant factor in 11 impairments.
Stock companies, which are the most common structure in the industry, represented 73% of the total impairments in the period, according to the report.
Best said one interesting development has been the rise of risk retention group impairments during the period. They totaled 33, or 10% of the total.
The study also found that of the 16 years covered in the study, the six years of 2000-2005 were by far the worst, with 162 impairments that included 53 workers compensation insurers, 37 personal lines insurers and 34 companies that were focused on commercial lines. Of the remaining 32, 17 were medical professional liability insurers.
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