Effects of Loss Reserve Margins in Calendar Year Results

As almost everyone knows all estimates have some margin of error and as loss reserves consist of estimates they are likely to contain some inaccuracies. Inaccuracies in loss reserves will, of course, have an effect on calendar year results, especially in lines of insurance such as auto bodily injury, general bodily injury and workmen’s compensation, where loss reserves are very large when related to annual earned premiums.