US P&C insurers' reserve releases continue to decline. For P&C insurers including personal, commercial, and financial lines, reserve development declined to $2.3 billion for 2023 from $4.5 billion for 2022 and $5.9 billion for 2021 (Exhibit 1 in report and below my signature). General liability losses have more than doubled in the last 10 years.
Increasingly litigious environment driving claims inflation. Factors driving social inflation for insurers include negative attitudes toward corporations, increased propensity to sue and retain counsel, higher jury awards and settlements and the use of litigation financing. Jury awards of $10 million or more are increasing in number and size.
Personal auto adverse reserve development signals higher loss cost trends for commercial lines. Social inflation generally hits personal auto insurers first because claims tend to be numerous, smaller and settle more quickly, which means these trends take longer to play out in longer-tail lines such as general liability and commercial auto
Some liabilities continue for decades or emerge as the legal environment changes. Liabilities for P&C (re)insurers may emerge many years or even decades after a policy has been written and can take decades to fully resolve. Recent and emerging risks include opioid liability, PFAS (“forever chemicals”) and microplastics.
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