ISO Casualty Index Identifies Broad Based Deterioration in Insurers Casualty Loss Ratios

January 1, 2011 / 2 min read

JERSEY CITY, N.J., October 13, 2011 — ISO has prepared the scheduled quarterly update to its ISO Casualty Index, covering data collected through the fourth quarter of 2010. According to the most recent analysis, which includes the first available snapshot of accident year 2010, the latest observation shows a continuing trend of increasing loss ratios since 2005. The trend continues, with few exceptions, in the ten segments of general liability and commercial automobile liability insurance captured by the ISO Casualty Index.

The analysis compares loss ratios across accident years at quarterly points of “maturity,” meaning the amount of time elapsed since the beginning of the given accident year.

The ISO Casualty Index provides an independent, transparent, and robust reference point for monitoring the U.S. insurance industry’s trends in casualty loss ratio (i.e., ratio of losses to the corresponding premium) and casualty loss development (i.e., emergence of losses over time).

“It takes a number of years to determine the precise cost of casualty losses,” said Joseph Izzo, assistant vice president and associate actuary at ISO. “The ISO Casualty Index allows comparison of loss ratios across years at a consistent maturity, which can allow earlier identification of possible trends.”

Those trends are seen in an analysis of insurer loss payments, as well as a separate analysis that also takes into account insurers’ case reserves (i.e., outstanding reserves attributed to specific claims). The effect is particularly notable for the manufacturers and contractors segments, where 2010 has experienced the highest loss ratios at a 12-month maturity since 2001.

The analysis of loss development trends shows that loss emergence in recent quarters has been consistent with historical patterns, suggesting that changes in economic and legal conditions along with insurers’ claim settlement practices are not significantly altering the historical loss development relationships.

The ISO Casualty Index is derived from ISO’s extensive database of transactional records aggregated from direct primary insurers. It provides the ability to track underwriting cycles, manage adverse loss experience, and benchmark performance.

About ISO
Since 1971, ISO has been a leading source of information about property/casualty insurance risk. For a broad spectrum of commercial and personal lines of insurance, the company provides statistical, actuarial underwriting, and claims information; policy language; information about specific locations; fraud identification tools; and technical services. ISO serves insurers, reinsurers, agents and brokers, insurance regulators, risk managers, and other participants in the property/casualty insurance marketplace. ISO is a member of the Verisk Insurance Solutions group at Verisk Analytics (Nasdaq:VRSK). For more information, visit www.verisk.com.

Release: Immediate

Contact:
Giuseppe Barone/Erica Helton
MWW Group (for ISO)
(201) 507-9500
gbarone@mww.com
ehelton@mww.com