Assured Research’s year-end 2025 reserve study estimates a $12.5 billion deficiency in the other liability (occurrence) line, the largest shortfall of any single line of business in the P/C industry. Of that total, $10.5 billion sits in accident years 2021 through 2024. The industry booked $7.3 billion in calendar-year adverse development for this line in 2025 alone, with $3.9 billion attributable to accident years 2021 through 2023 and nearly $3 billion from 2022 and 2023 combined.
The broader P/C industry reserve position actually improved to $20.7 billion redundant at year-end 2025, up from $2.0 billion a year earlier. But other liability occurrence is the outlier pulling in the opposite direction, even as workers’ compensation showed $5.5 billion in favorable development and private passenger auto carried $12.0 billion in redundancy.
Who It Affects
Self-insured public entities, municipalities, school districts, and any organization retaining general liability risk on its own balance sheet should pay attention. The “other liability (occurrence)” line is the Schedule P category that captures most GL claims. If the industry’s actuaries have been underestimating ultimate losses in this line for four consecutive accident years, the same estimation risk applies to your retained layer.
The Reserve Mechanism
The pattern here points to two related problems: initial expected loss ratios set too low, and development factors that understate how far recent-year claims still have to run.
Assured Research analyst William Wilt projects that ultimate loss ratios for accident years 2021 through 2023 are running roughly 5 percentage points above the figures the industry initially published. That gap shows up as adverse development when carriers strengthen reserves in later calendar years. Liberty Mutual posted $1.3 billion and Chubb approximately $700 million in other liability reserve charges in 2025. S&P Global’s Tim Zawacki noted that loss trends are “outrunning pricing” and that competitive pressures prevent full catch-up.
The shift in where adverse development originates is telling. In calendar year 2021, 77.9% of reserve strengthening came from accident years prior to 2016 (legacy claims). By calendar year 2025, only 14.1% came from those oldest years. The problem has migrated from old tails to recent accident years, which means current loss picks (the expected claim ratios used in Bornhuetter-Ferguson and similar methods) were set too low. For self-insured programs, this is a direct signal to revisit the a priori loss ratio your actuary is using for accident years 2021 forward, and to check whether your selected development factors reflect the heavier development now emerging in the industry data.
What to Ask Your Actuary
- Are the development factors in our GL triangle reflecting the industry’s recent-year adverse development pattern, or are they still anchored to the more favorable pre-2021 experience?
- Have we stress-tested our GL IBNR by adding 5 points to the expected ultimate loss ratio for accident years 2021 through 2023, consistent with the Assured Research findings?
- What is our implied carried loss ratio for each open accident year, and how does it compare to the industry’s revised ultimates for the other liability occurrence line?
What to Watch Next
Q1 2026 carrier earnings reports, due from April through May, will reveal whether additional reserve charges land in GL and other liability. If Liberty Mutual, Chubb, and peers continue strengthening accident years 2021 through 2023, the industry underpricing thesis firms up. That would warrant a corresponding review of development factor selections and expected loss ratios in self-insured GL and public-entity programs before the next annual reserve study.