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Environmental loss payments outpace incurred losses: A.M. Best

Posted On: Oct. 22, 2020 2:30 PM CST


The U.S. property/casualty insurance industry’s asbestos and environmental loss payments continue to outpace incurred losses, A.M. Best Co. said in a report issued Thursday.

Oldwick, New Jersey, based-A.M. Best said in its report that A&E loss reserves have declined over the past 10-plus years, and over the past five years, the industry has paid out $16.1 billion for A&E claims while incurring $11.3 billion in losses.

Its estimates for asbestos and environmental losses for the industry remain unchanged at $100 billion and $46 billion, respectively, as of year-end 2019, according to the report, AM Best’s A&E Loss Estimates Remain Unchanged.

The report said the industry has funded about 91% of its aggregate A&E exposures, which translates into an unfunded liability of about $9 billion for asbestos and $4 billion for environmental, although these are “relatively small amounts” when compared to cumulative losses of more than $91 billion for asbestos and $42 billion for environmental.

Incurred losses for asbestos were down about 13% the past five years, while environmental losses have fluctuated within a narrow range during that period, ending 2019 with an increase of more than 10%, the report said. 

Travelers Cos. Inc. reported a $295 million increase to its asbestos reserves Tuesday.