Business-wide shift towards under-reserving?
In current improvement years, notably from 2020 to 2024, the reserve-to-paid-loss ratio has trended sharply downward for many insurers. This ratio, which compares carried reserves to cumulative paid losses, helps assess reserve sufficiency by displaying how a lot reserve stays for each greenback already paid in claims. Whereas a ratio beneath 0.9 isn’t essentially problematic in isolation, a widespread and sustained decline might point out that many firms are under-reserving — doubtlessly to spice up near-term monetary outcomes or because of overly optimistic assumptions about declare improvement.
