The U.S. property/casualty insurance industry’s net asbestos liability reserves declined again last year, even as net incurred asbestos losses and loss adjustment expenses jumped by 29%, S&P Global Market Intelligence said Monday.
The increase in asbestos losses and costs raises concerns about reserve adequacy and evolving litigation patterns, S&P said in its analysis.
Net incurred asbestos losses and loss adjustment expenses rose to $1.29 billion in 2024 from $986.2 million the previous year, according to the report. Net calendar year payments for asbestos losses and LAE also surged to $1.49 billion in 2024, up 2%.
The industry’s asbestos liability net reserves decreased to $12.37 billion in 2024, continuing a 14-year trend.
The 15 largest groups with asbestos liability-related reserves held $11.16 billion at the end of 2024, according to the report. Berkshire Hathaway, The Hartford, American International Group and Travelers are among the top insurers, collectively holding 90% of the industry’s net asbestos reserves.
Meanwhile, environmental liability net reserves also fell for the fourth straight year to $3.94 billion, the first time below the $4 billion mark since 1996, the report said.
Industrywide net incurred environmental losses totaled $422.7 million in 2024, down 6%.
However, Liberty Mutual’s environmental losses increased sharply, indicating challenges in managing mature pollution exposures, S&P said.
The persistent adverse development across both asbestos and environmental exposures shows the fundamental challenge these liabilities pose to the property and casualty industry, S&P said.
“The combination of rising net incurred losses and elevated payment levels in 2024 suggests that the ‘tail’ on these decades-old policies may be longer than many carriers anticipated, with implications for reserve adequacy and capital management extending well into the future,” the report said.