The Hartford 2012 Annual Report Download - page 212

Table of Contents
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

Examples of current trends affecting frequency and severity include increases in medical cost inflation rates, the changing use of medical care procedures, the
introduction of new products and changes in internal claim practices. Other trends include changes in the legislative and regulatory environment over workers’
compensation claims and evolving exposures to claims relating to molestation or abuse and other mass torts. In the case of the reserves for asbestos exposures,
factors contributing to the high degree of uncertainty include inadequate loss development patterns, plaintiffs’ expanding theories of liability, the risks inherent
in major litigation, and inconsistent emerging legal doctrines. In the case of the reserves for environmental exposures, factors contributing to the high degree of
uncertainty include expanding theories of liabilities and damages, the risks inherent in major litigation, inconsistent decisions concerning the existence and
scope of coverage for environmental claims, and uncertainty as to the monetary amount being sought by the claimant from the insured.
The following table presents (favorable) unfavorable prior accident years reserve development:

  
Auto liability $ (25) $ (97) $ (169)
Homeowners (32)(1)23
Professional liability 40 29 (88)
Package business (20) (76) (19)
Workers’ compensation 78 171 (70)
General liability (87)(40)(108)
Fidelity and surety (9) (7) (5)
Commercial property (8)(4) (16)
Net asbestos reserves 48 294 189
Net environmental reserves 10 26 67
All other non-A&E — — 11
Uncollectible reinsurance — — (30)
Change in workers' compensation discount, including accretion 52 38 26
Catastrophes (66)37 11
Other reserve re-estimates, net $15 $(3) $ (18)
    
Net favorable reserve development in 2012 primarily included the following:
•a release of general liability reserves, for accident years 2006 to 2008;
•a release of catastrophes, primarily related to the 2001 World Trade Center worker's compensation claims;
•partially offset by a strengthening of reserves for workers’ compensation reserves, for accident years 2009 to 2011; and
•also offset by a strengthening of asbestos and environmental reserves.
Net unfavorable reserve development in 2011 primarily included the following:
•a strengthening of reserves for workers’ compensation reserves, for accident years 2008 to 2010;
•a strengthening of asbestos and environmental reserves;
•partially offset by a release of auto liability claims for accident years 2006 to 2010; and
•also offset by a release of package business liability coverages in accident years 2005 to 2009.
Net favorable reserve development in 2010 primarily included the following:
•a release of reserves for auto liability, claims, for accident years 2002 to 2009;
•a release of reserves for professional liability claims, for accident years 2004 to 2008;
•a release of general liability claims, primarily related to accident years 2005 to 2008;
•a release of workers’ compensation reserves related to accident years 2006 and 2007; and
•partially offset by a strengthening of asbestos and environmental reserves.
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