On the downside, the Saudi market saw a substantial loss-making year in 2013, stemming mainly from inadequate pricing and material reserve deficiencies
in the motor and medical portfolios.
In the next five years, Guy Carpenter said there is potential for reserve deficiencies
to play an important role.
Prior year's reserve deficiencies
are now mainly funded.
Ongoing focus on underwriting vigilance and adequate pricing should mitigate the need to address large reserve deficiencies
as in 2002 and 2003.
Fitch believes that these reserve deficiencies
to a large degree reflect implicit loss-reserve discounting by insurers of their workers' comp business," the report said.
The Board also is amending the penalty provision of Regulation D, which is calculated based on the discount rate, to conform the calculation of penalties for reserve deficiencies
to the new discount rate framework.
While Fitch does not anticipate broad rating actions related to asbestos, the ratings of individual companies could be adversely affected by the severity of reserve deficiencies
relative to capital.
Co Rates hardened on primary workers' compensation, but the impact of low investment yields, reserve deficiencies
and adverse development, growth in residual market volume, and the impact of the Patient Protection and Affordable Care Act, plus the expiration of Terrorism Risk Insurance Program Reauthorization Act, remain unanswered.
Prior years' reserve deficiencies
are being funded and the competitive part of the commercial lines casualty pricing cycle is here again.
Loss reserves are deficient when the funds set aside to cover claims fail short of the amounts that will be needed--that is, when insurers have underestimated loss costs--and the consequences of loss reserve deficiencies
can be disastrous.
4 /PRNewswire/ -- Reserve deficiencies
, which have plagued property-casualty (P-C) insurers in recent years, improved dramatically in 2003, according to a new study by Conning Research & Consulting.
As for the industry's high-profile reserve deficiencies
, he said, quite simply, "the industry isn't good at this; it has a poor track record.