In this chart Guy Carpenter is looking at the reserve cycle in a different way: by studying the booked ultimate loss by accident year. We choose accident year because actuaries typically analyze losses according to their year of accident. The estimate of the ultimate loss for a particular accident year ideally should not change over time if the initial estimate was correct. However, using U.S. industry data, we find that as a particular accident year is re-estimated periodically, a cycle appears. Continue reading…
Posts Tagged ‘loss reserves’
From our Chart Room, we review the increasing gap between GDP growth and reinsurance in the Asia Pacific region and the small proportion of losses that were insured in both the advanced and emerging economies.
Chart: Increasing Gap Between GDP Growth and Reinsurance Limit in Asia Pacific: The chart shows that growth in reinsurance catastrophe limit in the Asia Pacific region has clearly not kept pace with economic growth since 2006. Stronger rates of economic growth in such emerging markets mean the gap between economic and insured losses has the potential to increase further.
Chart: Economic and Insured Losses in Advanced and Emerging Economies: The chart shows how small a proportion of losses were insured in both advanced and emerging markets between 2002 and 2011.
Jessica Leong, Lead Casualty Specialty Actuary
With the release of the 2013 annual statutory statements, we have updated the Guy Carpenter reserve cycle analysis as shown in the chart. Overall, the figures indicate a trend showing the industry continuing to release reserves through this year, as two lines of business appear to exert the greatest impact on the cycle.
Guy Carpenter today released an updated analysis of industry reserves. Based on 2013 annual statutory statements, Guy Carpenter has updated their analysis of the reserve cycle by examining accident year data for eleven lines of business. According to the analysis, workers compensation reserves appear to be improving, despite noted deterioration over the last year. Similarly, medical professional liability and commercial multi peril lines appear to be making tentative turns to show greater reserve release in accident year 2012 than expected. Conversely, other lines such as commercial auto liability continued to exhibit deterioration.