Depleted reserves can signal trouble

Article Abstract:

The property and casualty insurance industry's core loss reserves have begun to decline as the industry attempts to compensate for depressed earnings and premium rates. The industry's core reserves for 1996 equalled approximately $35 billion, 10% below the estimate for ultimate required reserves and $5 bil less than for 1995. This decline is particularly alarming given that the industry is expecting further reserve declines due to the continued deterioration of premium adequacy in the commercial insurance segment and growing asbestos and environmental exposures.

Statistics

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It was a very mixed year; 1996 financial results: earnings, surplus growth mask insurers' woes as the industry grapples with losses and competition

Article Abstract:

The US property/casualty insurance companies registered slow growth in the highly competitive market mirrored in their financial results for 1996 according to a A.M. Best Co survey. Catastrophe losses and increasing price inadequacies in commercial product lines affected property/casualty firms' financial situation in 1996. The property/casualty insurance sector's net consolidated income increased 17% to $24.2 bil in 1996 from $20.6 bil in 1995 due to a $3 bil-increase in capital gains. The sector's net premium increased 3.6% and its surplus 12% in 1996.

Finance

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Measuring legal results can reduce costs, audits

Article Abstract:

Litigation management is important for controlling outside legal expenses. Legal bill auditing must be done on those bills which charge for time and expenses. Alternatives to this type of billing, especially if all legal bills are the same types of claims, can include an average figure. Flat fee billing eliminates the financial costs associated with an outside legal bill auditor.

Management, Insurance industry, Accounting and auditing, Costs (Law), Legal fees

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