Property & Casualty Loss Reserves – Are They What They Seem?
by Joseph L. Petrelli Demotech, Inc. prides itself on its ability to identify emerging issues and leading edge opportunities. Since our incorporation in 1985, we have been successful in this area. Sometimes we are months ahead of an issue and often we are years ahead of our time. For example, on the topic of property and casualty insurance loss reserves, we studied 1,921 insurance companies and formed an opinion. We spoke out in the August 6, 2003 edition of the Insurance Journal. This article was our initial effort to bring specificity to a topic that needs to be addressed on a company by company basis, not an industrywide basis. Individual insurance companies establish loss reserves based on their book of business. The industry does not set reserves on a collective basis. The original Insurance Journal article can be accessed here. Several months after our perspective was completed and published, some of the international rating agencies published their opinion on property and casual
