Predictions that the property/casualty insurance industry is in the midst of repeating the type of loss reserving cycle that accompanied the hard market of the beginning year of this century may be overblown, according to an analyst.

In fact, William Wilt, president of Assured Research, believes that “much (but not all) of the financial hole the industry had dug for accident years 2016-2019 has now been filled.”

The industry analyst and Fellow of the Casualty Actuarial Society delivered the assessment as part of his firm’s analysis of the year-end 2023 carried loss reserve position for the P/C insurance industry, which Assured Research puts at roughly $11.7 billion redundant in a new report titled “P&C Loss Reserves: Keep Calm and Carry On.”

While that’s about half the redundancy Assured Research estimated for year-end 2022, for some well-reserved individual lines of business, including workers compensation and short-tailed property, estimated reserve redundancies are even bigger for year-end 2023 than they were for year-end 2022. (Editor’s Note: The Assured Research analysis is limited to the last 10 accident years.)

Like the year-end 2022 study, the Assured Research analysis for year-end 2023 puts the biggest deficiencies in the liability reinsurance, commercial auto liability and other liability insurance-occurrence lines. But the latest annual report notes that the industry added some $8 billion to loss reserves for these two “most problematic lines.”

“We believe a substantial portion of the adverse development expected on the problematic accident years of 2016-2019 is now behind us,” Wilt wrote in the Assured Research report, which starts with a comparison of adverse development in the other liability-occurrence line that emerged for accident years 1997-2002 during the previous hard market and expected development for accident years 2015-2019, showing a better picture for the more recent years. A graphic in the report notes, for example, that accident year 1999 ultimately had 31 loss ratio points of adverse development. In contrast, the worst year among the 2015-2019 accident years—2017—is only expected to develop by 13 points, according to Assured Research’s latest estimates.

This article is based on the Assured Research report “P&C Loss Reserves: Keep Calm and Carry On,” published March 19, 2024, revealing an $11.7 billion P/C industry loss reserve redundancy at year-end 2023.

In last year’s report, “Year End 2022 Reserve Study: Disrupted Diagonals Manifesting,” published March 16, 2023, and in a prior report, “Assured Industry Study | 2021 Industry Reserve Analysis: Reserves Are Level Set; Bring on 2022,” Assured Research estimated redundancies of $22 billion for year-end 2022 and year-end 2021.

All three reports break down the results by line of business.

Assured Research’s reserve analyses cover the most recent 10 accident years only. Legacy liabilities from prior years are not considered.

To learn more about Assured Research or to contact the author, visit the Assured Research website

Bottom line, there is still some development left in those problematic 2016-2019 accident years that executives at companies like AXIS Capital, Markel Corp., Everest Group and Swiss Re, among others, have been talking about on earnings conference calls.

Related article:What Industry Executives Are Saying About Loss Reserves and Social Inflation

But for other liability-occurrence, what is yet to come will not put the industry back into “a 9/11-era reserving cycle,” according to the Assured Research estimates.

“We expect more adverse development for the line, but we also believe the worst is over,” the report says.

In addition, Assured Research doesn’t estimate “that the industry in commercial auto has meaningfully more reserve charges to take” for the problematic accident years, Wilt said on an audio digest that he recorded to summarize the report findings for subscribers to his firm’s research.

Still, there are some problems ahead for commercial auto insurers. “It just looks bad,” he said, referring instead to concerns about the 2021, 2022 and 2023 accident years which look to be “short by some five percentage points.”

“That’s a problem not just from a reserving perspective but also from a pricing perspective,” he said, contrasting other liability where Assured Research’s ultimate loss ratio estimate for accident year 2023 almost matches the industry aggregate ultimate loss ratio.

The report offers presentations of incremental reported loss ratio histories by accident year and development period (triangles), along with commentary, for seven of the 17 lines of business Assured Research studied: workers comp, property insurance, other liability (both claims made and occurrence), private passenger auto liability, liability reinsurance and commercial auto liability.

While Assured Research estimates deficiencies of about $3 billion for both the private passenger auto liability and liability reinsurance lines, that shortfall for private passenger auto liability represents less than 2 percent of carried reserves for the line. For liability reinsurance, its more than 8 percent.

Throughout the report, Assured Research refers to the impacts of economic and social inflation on loss costs, and the pricing implications of reserve positions by line. On a “technical commentary” page of the report and in the audio digest, Wilt revealed that his firm has made explicit, conservative adjustments for inflationary impacts that “may not be baked into loss development factors” already. The conservatism probably added $18.6 billion of indicated reserves (across all impacted lines) to the analysis, he noted.

Separately, late last month, analysts at Morgan Stanley estimated that social inflation added $13.3-$24.5 billion of excess losses to the commercial auto liability line—or 7-13 percent of industry commercial auto losses from 2013-2022.

See related article, “What Industry Executives Are Saying About Loss Reserves and Social Inflation,” for some of the insights shared by P/C carrier and reinsurer executives during their fourth-quarter 2023 earnings reports.

To learn more about Assured Research or to contact the author visit the Assured Research website at