General Insurance Article - Enough in reserve? Is reinsurance in a new danger phase?

 • Deficient reserves are arguably the (re)insurance sector’s largest potential exposure.

 • JLT Re hopes its exhaustive reserving study will inform reinsurance managers and C-suite leaders in taking advantage of reserve protection.

  

 David Flandro, Global Head of Analytics, JLT Re, said: “By analysing quarterly calendar year reserve developments since 1998 for the top 30 global (re)insurance companies and comparing them to accident year loss trends, pricing and previous cycles, our research shows that net sector deficiencies are now likely closer to adversely affecting the sector’s income statement than any time since the early 2000s.”

  

 Mike Reynolds, Global CEO, JLT Re says, “Reserving levels are always under close scrutiny and this is especially true today as several carriers continue to release reserves to protect or enhance profits. JLT Re’s analysis shows that the reserving cycle has reached an inflection point and pressures are likely to intensify in the current market environment given the historical relationship between falling pricing and reserve deficiencies. Indeed, there have been some notable instances of reserve strengthening in recent quarters.”

  

 David Flandro concludes, “The clear implication is that now is the time to seek protection. It is always more economical to purchase adverse development cover (ADC) before deficiency trends are clearly manifest. Fortuitously, reinsurance pricing is at or near period lows in many medium and long-tail lines and cover is more easily obtained than it has been even in the recent past for those with the foresight to move quickly”.

  

 Link to the interactive report here: