The property/casualty insurance industry appears to have sufficient reserves under assumptions that current claims settlement patterns continue. This is the feeling of Stephan Christiansen, director of research at Conning Research & Consulting.

“However, some of this apparent improvement may be related to a slow-down in the economy affecting loss reserve development, and there is also a range of possible trends that suggest this improvement could reverse with economic recovery,” he says. “In light of this, insurers should be thinking now about how an increase in liability trends or a significant spike in inflation in the out years might affect legacy loss reserves.”

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