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Best’s Market Segment Report: Asbestos & Environmental Reserves Decline Along with Incurred Losses

AM Best is maintaining its estimate for ultimate net asbestos losses at $100 billion, with environmental losses also holding steady for another year at $46 billion, as of year-end 2022 data, according to a newly issued report.

A new Best’s Market Segment Report, titled, “Asbestos & Environmental Loss Reserves Declined Along with Incurred Losses,” notes that the industry has funded 95% of its aggregate asbestos & environmental (A&E) exposures, which translates into unfunded liabilities of approximately $6 billion for asbestos and $2 billion for environmental.

A&E loss reserves have declined for more than a decade, as loss payments have outpaced incurred losses, according to the report. Over the past five years, insurers have paid out approximately $13 billion for A&E claims, while incurring a bit less than $9 billion in losses. In 2022, asbestos reserves declined 4.9%, to $15.4 billion, while environmental reserves were unchanged from 2021, at $4.6 billion. Determining ultimate funding tends to be extremely difficult, given that the ultimate exposure cannot be known.

“Given the declining incurred losses but higher levels of paid losses, AM Best’s estimate of ultimate losses remains on target,” said Jieqiu Fan, associate director, AM Best. “We will continue to monitor the state of A&E losses.”

Annual incurred A&E losses have declined overall since 2018. In 2022, the drop was 4%, following a larger drop of 16% in 2021, after being relatively flat for two years. Asbestos incurred losses have declined steadily in the past five years and were down by approximately 18% in 2022. Environmental losses have fluctuated within a narrow range, rising by 50% in 2022, following a 27% decline in 2021, according to the report.

The drop in asbestos losses was driven by a reduced level of losses from some of the larger groups, such as Berkshire Hathaway Group and Swiss Re, in 2022. The increase in environmental losses was driven by Berkshire Hathaway Group, Travelers Group, and Chubb INA Group year over year.

“At current payout levels, A&E reserves will run off in about eight years, assuming no additional reserve strengthening,” said Brian O’Larte, director, AM Best. “Payout levels have been volatile the past five years, with 2022 payouts rising by 9% year over year.

In 2022, 30 groups held almost 96% of the industry’s total net A&E reserves. Five groups recorded net incurred A&E losses of $100 million or more in 2022. Of these, four posted asbestos losses exceeding $100 million each; one posted environmental losses exceeding $100 million as well.

Asbestos reserves made up 77% of total A&E reserves, reflecting the comparatively more aggressive funding of asbestos liabilities versus environmental. Asbestos loss payments as a percentage of total A&E loss payments have fluctuated between 65% and 84% over the past five years and were at 72% in 2022.

To access the full copy of this market segment report, please visit

To view a video with AM Best Associate Director Jieqiu Fan about this report, please visit

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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