Inadequate reserves

The US property and casualty industry suffered its first ever net loss in 2001 as the result of sharply higher underwriting losses and substantial deterioration investment results, according to a recent report by the Insurance Services Office (ISO). The industry lost $7.9bn in 2001 after earning $20.6bn in 2000. But ISO’s analysis of statutory financial statements indicates that US insurers included only about $10bn of net underwriting losses from the World Trade Center attack in their results through year-end 2001. According to John Kollar , ISO vice president for consulting and research, this means US insurers may be hit with another $15bn in losses from the terrorist attack on 11 September. And although the industry strengthened its reserves for losses other than E&A by between $1 billion and $7 billion in 2001. ISO estimates that the industry’s reserves for losses other than evironmental and asbestos (A&E) were deficient by between $25 billion and $45 billion as of year-end 2001. Below is a summary of the ISO report, Insurers Financial Results: 2001