Jessica Leong, Lead Casualty Specialty Actuary
What does the analysis mean for financial year 2014? Given the trends in the cycle, it is useful to break this question down into two sections:
(1) What will happen to the reserves for accident years 2012 and prior?
(2) What will happen to the reserves for accident year 2013 over the next year?
Accident Years 2012 and prior:
Accident years 2003 to 2012 for all lines in total have released reserves to date, so we can say that they are very likely to continue to release reserves in financial year 2014.
Accident Year 2013:
What happened in accident year 2012 can provide clues to reserve momentum for 2013.
Accident year 2012 released reserves last year, largely from the homeowners and private passenger auto lines. These two lines have release or deterioration of reserves that are more random than cyclical. Therefore, it is difficult to predict the outcome of accident year 2013 results for these lines.
Accident year 2012 also released reserves at an increased rate for workers compensation, medical professional liability and commercial multi peril. This bodes well for accident year 2013 reserve movements in 2014 for these lines.
Want to find out more?
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(1) U.S. Patent number 8,452,621 B2 and patent pending
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