The 21 financial impairments in 2012 are less than the P&C historical average impairment count of 25.8 and mark a significant decline from the 34 reported for 2011 by A.M. Best last year. It also was in stark contrast to the life/health industry’s two 2012 financial impairments, which held the impairment count and rate for the life/health industry at its lowest in 50 years, according to A.M. Best’s 2012 Impairment Review.
The rating agency points to the prolonged effects of the struggling economy as the main reason for the 2012 impairments. Only one 2012 FIC — an automobile writer — was the direct result of shock catastrophe losses, although catastrophe losses may have been a factor for some other impaired auto writers; they represented the largest number of impairments at six, or 30 percent of the total, according to the report. In 2012, more than a third of the total impairments were in auto liability, which the rating agency says has seen a marked increase in severity of bodily injury claims that has led many auto writers to respond with higher rates. About a fifth of the impairments were in other liability, heavily concentrated in construction-related business, and 14 percent were in workers’ comp, a line that continues to struggle with unprofitable underwriting despite increasing premiums and rates in the past two years.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access