U.S. p&c reserve deficiency doubled in last year: Conning

A new study from Conning Research & Consulting Inc. suggests that despite rate increases, the U.S. p&c industry continues to see deteriorating results and reserve deficiencies.
In the past year, the industry’s reserve deficiency has actually doubled, and offers inadequate protection against ever-increasing loss costs, Conning says in its report “Property-Casualty Reserve Adequacy: Digging Deeper.” This news comes despite industry attempts to bolster reserves throughout 2002, leading to an 8% increase overall.
“All nine of the p&c lines [of business] we studied are deficient, with a total reserve deficiency of US$38.5 billion, up from US$16 billion last year,” says Michael Weinstein, director of research for Conning. Among the pressures on reserves are mold, asbestos and other environmental claims, the overall U.S. economic recession, medical cost pressures and even “the lingering impact of September 11”.
The study urges insurers to look more closely at reserving and pricing strategies, which represent the largest liability on their balance-sheets.