Good news? P/C profit falls 96 percent

Of course, he then immediately notes that the industry’s profit fell 96 percent last year, and it would have lost money overall if insurers hadn’t released billions of dollars from overpayments to its reserve requirements. Reserve releases, common in the industry, reflect an insurer’s judgment that it had set aside more to pay claims than it now expects to need.

Reserve releases will be much smaller this year, meaning P/C companies won’t be able to maintain the same level of stability. And of course, if we get whacked with another Katrina, things will fall apart rather quickly. But for now, even though it’s a trend section, we’ll take it one day at a time.