Reserve Releases at the End of the Line for Insurance Companies

I read an article online from the Insurance Journal that evaluated the 2009 reserve changes industry wide. The data showed that the industry basically made money by offsetting climbing losses with reserve releases from previous years. This is a perfectly acceptable strategy since the reserves were set up to pay future losses that never developed. However those days are probably gone. This year is heating up to be a significant loss year for the industry and reserve releases may compromise ratings, so the industry must use underwriting to make money. I don't expect rates to rise because of the economic conditions but I do expect a little day of reckoning for the insurance companies.  Until next time be careful out there and know your risks. K

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