Allstate 2015 Annual Report Download - page 132

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For a detailed description of the MCCA, PLIGA and Lloyd’s, see Note 10 of the consolidated financial statements. As
of December 31, 2015, other than the recoverable balances listed in the table above, no other amount due or estimated
to be due from any single Property-Liability reinsurer was in excess of $21 million.
The effects of reinsurance ceded on our property-liability premiums earned and claims and claims expense for the
years ended December 31 are summarized in the following table.
($ in millions) 2015 2014 2013
Ceded property-liability premiums earned $ 1,006 $ 1,030 $ 1,069
Ceded property‑liability claims and claims expense
Industry pool and facilities
MCCA $ 337 $ 1,042 $ 954
National Flood Insurance Program 120 38 289
PLIGA 9 158 356
Other 78 69 63
Subtotal industry pools and facilities 544 1,307 1,662
Other 58 86 55
Ceded property-liability claims and claims expense $ 602 $ 1,393 $ 1,717
In 2015, ceded property-liability premiums earned decreased $24 million, primarily due to decreased reinsurance
premium rates and a decrease in policies written for the National Flood Insurance Program and the MCCA. In 2014,
ceded property-liability premiums earned decreased $39 million, primarily due to decreased reinsurance premium rates
and acquiring additional reinsurance in the capital markets. MCCA ceded premiums were $84 million, $99 million and
$101 million in 2015, 2014 and 2013, respectively.
Ceded property-liability claims and claims expense decreased in 2015 primarily due to lower reserve increases for
the MCCA and PLIGA programs. Ceded property-liability claims and claims expense decreased in 2014 primarily due
to lower amounts ceded to the National Flood Insurance Program and lower reserve increases for the PLIGA program.
Reserve increases in the PLIGA program in 2015 are attributable to limited personal injury protection coverage on
policies written prior to 2004. Reserve increases in the PLIGA program in 2014 are attributable to unlimited personal
injury protection coverage on policies written prior to 1991. The ceded claims reflects increased longer term paid loss
trends due to increased costs of medical care and increased longevity of claimants. New claims for this cohort of policies
are unlikely and pending claims are expected to decline.
Our claim reserve development experience is similar to the MCCA with reported and pending claims increasing in
recent years. Moreover, the MCCA has reported severity increasing with nearly 60% of reimbursements for attendant
and residential care services. Michigan’s unique no-fault auto insurance law provides unlimited lifetime coverage for
medical expenses resulting from vehicle accidents. The reserve increases in the MCCA program are attributable to an
increased recognition of longer term paid loss trends. The paid loss trends are rising due to increased costs in medical
and attendant care and increased longevity of claimants. As a result of continuing to originate auto policies in Michigan
with unlimited personal injury protection coverage, we expect pending MCCA covered losses to increase each year.
The table below summarizes reserves and claim activity for Michigan personal injury protection claims before (gross)
and after (net) the effects of MCCA reinsurance for the years ended December 31.
($ in millions) 2015 2014 2013
Gross Net Gross Net Gross Net
Beginning reserves $ 4,804 $ 417 $ 3,798 $ 365 $ 2,866 $ 299
Incurred claims and claims expense‑current year 526 200 420 178 417 181
Incurred claims and claims expense‑prior years 37 26 819 19 731 13
Claims and claims expense paid‑current year (2) (56) (55) (46) (45) (44) (42)
Claims and claims expense paid‑prior years (2) (190) (102) (187) (100) (172) (86)
Ending reserves $ 5,121 (1) $486 $4,804 (1) $417 $3,798 (1) $365
(1) Reserves for the years ended December 31, 2015 and 2014, comprise 86% case reserves (claims with a file review conducted) and 14% IBNR.
Reserves for the year ended December 31, 2013 comprise 66% case reserves and 34% IBNR.
(2) Paid claims and claims expenses, reported in the table for the current and prior year, recovered from the MCCA totaled $89 million, $88 million and
$88 million in 2015, 2014 and 2013, respectively.