U.S. liability insurance results have been favorable in the past few years, buoyed by benign loss frequency, reserve releases, and the absence of major casualty catastrophes. The prospect of continuation of such attractive performance for liability insurance outcomes is, however, in question.

Executive Summary

The exceptionally favorable liability insurance results of recent years, like all good things, must eventually come to an end, Conning's Jerry Theodorou notes. He reviews financial performance indicators and underlying drivers of liability insurance outcomes that suggest an inflection point.

Shrinking investment yields, diminished potential for reserve releases, and adverse loss frequency and severity trends, are coalescing to create a challenging future for liability insurers. Liability insurance historically has been responsible for the most existential pain to insurers, from asbestos litigation to class action products liability claims and Enron-era D&O claims, so it is important for insurers and reinsurers to understand current trends shaping future liability insurance outcomes.

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