Liability Market

PRA writes to financial lines insurers over claims reserving

The UK’s Prudential Regulation Authority (PRA) has written to the chief risk officer (CRO) of financial lines insurers over reserving and claims experience. It said two of the areas of concern highlighted in a previous letter last year persist: bias in reserve estimates (over-focus on favourable claims development potential, despite evidence of worsening incurred claims experience), and possible weakening in case reserve estimates. It said its analysis indicates that reserving assumptions may have weakened over time, while data shows that the claims experience continues to deteriorate.