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Losses, Claims and Settlement Expenses
12 Months Ended
Dec. 31, 2021
Insurance [Abstract]  
Losses, Claims and Settlement Expenses Losses, Claims and Settlement ExpensesThe following table shows changes in aggregate reserves for the Company's losses, claims and settlement expenses:
Years Ended December 31:202120202019
Gross reserves at beginning of year$10,671.0 $9,929.5 $9,471.2 
Less: reinsurance losses recoverable3,650.5 3,249.7 3,006.3 
Net reserves at beginning of year:
General Insurance6,328.0 6,021.3 5,766.1 
Title Insurance556.1 530.9 533.4 
RFIG Run-off127.6 118.9 154.5 
Other8.6 8.4 10.8 
Sub-total7,020.4 6,679.7 6,464.9 
Incurred claims and claim adjustment expenses:
Provisions for insured events of the current year:
General Insurance2,418.3 2,380.5 2,422.7 
Title Insurance160.6 117.2 99.5 
RFIG Run-off19.3 48.8 41.1 
Other12.0 11.2 14.1 
Sub-total2,610.4 2,557.8 2,577.6 
Change in provision for insured events of prior years:
General Insurance(137.9)(27.4)14.5 
Title Insurance(47.6)(41.8)(32.1)
RFIG Run-off(21.1)(11.9)(9.4)
Other(3.9)(2.5)(3.9)
Sub-total(210.6)(83.8)(30.9)
Total incurred claims and claim adjustment expenses2,399.7 2,474.0 2,546.6 
Payments:
Claims and claim adjustment expenses attributable to
   insured events of the current year:
General Insurance781.5 783.2 835.4 
Title Insurance21.4 4.6 3.6 
RFIG Run-off.2 1.1 3.3 
Other7.7 6.4 9.1 
Sub-total810.9 795.5 851.5 
Claims and claim adjustment expenses attributable to
   insured events of prior years:
General Insurance1,239.8 1,263.1 1,346.6 
Title Insurance53.4 45.4 66.2 
RFIG Run-off14.3 27.0 64.0 
Other1.3 2.0 3.3 
Sub-total1,309.0 1,337.7 1,480.2 
Total payments2,120.0 2,133.2 2,331.7 
Amount of reserves for unpaid claims and claim adjustment expenses
at the end of each year, net of reinsurance losses recoverable:
General Insurance6,587.0 6,328.0 6,021.3 
Title Insurance594.2 556.1 530.9 
RFIG Run-off111.2 127.6 118.9 
Other7.6 8.6 8.4 
Sub-total7,300.2 7,020.4 6,679.7 
Reinsurance losses recoverable4,125.3 3,650.5 3,249.7 
Gross reserves at end of year$11,425.5 $10,671.0 $9,929.5 

For the three most recent calendar years, the above table indicates that the one-year development of consolidated reserves at the beginning of each year produced favorable developments of 3.0%, 1.3%, and .5% for 2021, 2020 and 2019, respectively, with average favorable annual developments of 1.6%. The Company believes that the factors most responsible, in varying and continually changing degrees, for favorable or unfavorable reserve developments include, as to many general insurance coverages, the effect of reserve discounts applicable to workers' compensation claims, changes in severity of litigated claims in particular, governmental or judicially imposed retroactive conditions in the settlement of claims such as noted above in regard to black lung disease claims, changes in inflation rates applicable to repairs and the medical portion of claims in particular, and changes in claims incurred but not reported due to the slower and highly volatile emergence patterns applicable to certain types of claims such as
those stemming from litigated, assumed reinsurance, or the A&E types of claims noted above. Specifically, in 2021 General Insurance favorable development was higher due predominantly to better than expected claims experience related to workers' compensation and commercial automobile reserves on older, more developed years. Favorable development experienced in Title Insurance reflects the declining claims activity since the Great Recession years. With respect to the RFIG Run-off segment, changes in favorable or unfavorable reserve development result from sales and prices of homes that can impact claim costs upon the disposition of foreclosed properties, changes in regional or local economic conditions and employment levels, the number of coverage rescissions and claims denials due to material misrepresentation in key underwriting information or non-compliance with prescribed underwriting guidelines, the extent of loan refinancing activity that can reduce the period of time over which a policy remains at risk, and lower than expected frequencies of claims incurred but not reported.

Federal Black Lung Regulations

Early in 2001, the Federal Department of Labor revised the Federal Black Lung Program regulations. The revisions basically require a reevaluation of previously settled, denied, or new occupational disease claims in the context of newly devised, more lenient standards when such claims are resubmitted. Following a number of challenges and appeals by the insurance and coal mining industries, the revised regulations were, for the most part, upheld in June, 2002 and are to be applied prospectively. Since 2001 black lung claims filed or refiled pursuant to these revised regulations have increased, though the volume of new claim reports has abated in recent years.

In March 2010, federal regulations were revised once again as part of the Patient Protection and Affordability Act. These revisions reinstitute two provisions that can potentially benefit claimants. In response to this legislation and the above noted 2001 change, black lung claims filed or refiled have risen once again. The vast majority of claims filed to date against Old Republic pertain to business underwritten through loss sensitive programs that permit the charge of additional or refund of return premiums to wholly or partially offset changes in estimated claim costs, or to business underwritten as a service carrier on behalf of various industry-wide involuntary market (i.e. assigned risk) pools. A much smaller portion pertains to business produced on a traditional risk transfer basis. The Company has established applicable reserves for claims as they have been reported and for claims not as yet reported on the basis of its historical experience as well as assumptions relative to the effect of the revised regulations.

Asbestosis and Environmental (A&E) Reserves

At December 31, 2021 and 2020, Old Republic's aggregate indemnity and loss adjustment expense reserves specifically identified with A&E exposures amounted to approximately $118.1 and $127.6 gross, respectively, and $77.2 and $82.4 net of reinsurance, respectively.

Old Republic's reserve estimates also include provisions for indemnity and settlement costs for various A&E claims that have been filed in the normal course of business against a number of its insurance subsidiaries. Many such claims relate to policies incepting prior to 1985, including many issued during a short period between 1981 and 1982 pursuant to an agency agreement canceled in 1982. Over the years, the Company's property and liability insurance subsidiaries have typically issued general liability insurance policies with face amounts ranging between $1.0 and $2.0 and rarely exceeding $10.0. Such policies have, in turn, been subject to reinsurance cessions which have typically reduced the subsidiaries' net retentions to $500 thousand or less as to each claim.

Old Republic's exposure to A&E claims cannot, however, be calculated by conventional insurance reserving methods for a variety of reasons, including: a) the absence of statistically valid data inasmuch as such claims generally involve long reporting delays and very often uncertainty as to the number and identity of insureds against whom such claims have arisen or will arise; and b) the litigation history of such or similar claims. Inconsistent court decisions stem from such questions as: when an alleged loss occurred, which policies provide coverage, how a loss is to be allocated among potentially responsible insureds and/or their insurance carriers, how policy coverage exclusions are to be interpreted, what types of environmental impairment or toxic tort claims are covered, when the insurer's duty to defend is triggered, how policy limits are to be calculated, and whether clean-up costs constitute property damage.

Over time, the Executive Branch and/or the Congress of the United States have proposed or considered changes in the legislation and rules affecting the determination of liability for A&E claims. As of December 31, 2021, however, there is no solid evidence to suggest that possible future changes might mitigate or reduce some or all of these claim exposures. Because of the above issues and uncertainties, estimation of reserves for losses and allocated loss adjustment expenses for A&E claims in particular is much more difficult to quantify with a high degree of precision. Accordingly, no representation can be made that the Company's reserves for such claims and related costs will not prove to be overstated or understated in the future. Based on average annual claims payments during the five most recent calendar years, such reserves represented a paid loss survival ratio of 5.9 years (gross) and 6.8 years (net of reinsurance) as of December 31, 2021 and 6.3 years (gross) and 7.1 years (net of reinsurance) as of December 31, 2020. Fluctuations in this ratio between years can be caused by the inconsistent pay out patterns associated with these types of claims. For the five years ended December 31, 2021, incurred A&E claim and related loss settlement costs have averaged .3% of average annual General Insurance claims and related settlement costs.

The following represents the Company's incurred and paid loss development tables for the major types of insurance coverages as of December 31, 2021. The information about incurred and paid claims development for the years ended December 31, 2012 to 2020 is presented as supplementary information.
Workers' Compensation
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2021
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported ClaimsCumulative Number of Reported Claims*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2012201320142015201620172018201920202021
2012$629.3 $647.2 $670.6 $678.1 $676.4 $671.1 $660.5 $654.7 $651.1 $646.5 $67.4 49,924
2013700.9 705.3 716.9 722.7 726.3 717.2 689.7 691.0 686.7 83.2 49,025
2014780.9 792.8 786.4 784.9 777.0 763.3 724.4 705.4 96.3 54,162
2015794.3 792.6 787.3 785.5 769.1 742.4 695.8 167.2 55,203
2016756.1 752.9 745.7 730.5 712.6 692.8 252.3 52,451
2017727.0 713.9 700.3 683.4 676.3 239.6 51,736
2018698.6 691.5 681.0 665.9 274.6 52,290
2019664.6 657.4 653.2 212.6 51,652
2020560.9 569.4 222.1 45,285
2021500.3 280.9 35,347
Total$6,492.7 (A)
* Reported claims are accumulated on an individual claimant basis and exclude external reinsurance assumed and participation in residual market pools as claim frequency information is not available.
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2012201320142015201620172018201920202021
2012$113.1 $265.8 $361.8 $426.7 $469.5 $496.6 $518.4 $531.5 $539.5 $545.2 
2013107.6 274.3 381.2 449.8 501.9 526.8 547.0 558.3 565.4 
2014116.9 293.7 397.1 466.0 499.5 524.8 544.9 554.6 
2015109.0 274.9 379.3 435.1 466.7 484.7 499.8 
2016102.5 253.5 334.4 383.5 408.4 425.2 
201799.6 244.6 334.8 383.1 414.3 
201894.8 240.6 320.5 367.2 
2019102.9 239.8 329.6 
202084.3 211.6 
202180.1 
Total$3,993.4 (B)
Net incurred claims and allocated claim adjustment expenses (A)$6,492.7 
Less: net paid claims and allocated claim adjustment expenses (B)3,993.4 
Sub-total2,499.3 
All outstanding liabilities before 2012, net of reinsurance631.1 
Liabilities for claims and allocated claim adjustment expenses, net of reinsurance$3,130.4 
General Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2021
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported ClaimsCumulative Number of Reported Claims*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2012201320142015201620172018201920202021
2012$95.0 $91.2 $89.2 $100.9 $107.3 $109.6 $108.2 $105.6 $105.0 $104.7 $7.7 5,274
201395.7 96.7 96.5 107.8 106.7 106.0 101.4 102.2 101.7 7.1 5,533
2014107.0 110.4 109.4 111.0 117.0 117.1 112.3 112.8 9.5 6,012
201596.0 96.3 99.2 102.3 104.8 105.8 99.8 14.4 5,565
201692.4 96.7 98.8 100.3 101.0 104.4 27.5 83,202
2017111.2 121.4 129.6 132.8 135.2 14.7 458,875
2018120.5 119.7 125.1 135.4 28.2 459,814
2019133.5 131.9 138.9 48.0 373,991
2020112.4 111.7 71.5 5,211
202194.2 66.3 4,012
$1,139.3 (A)
* Reported claims are accumulated on an individual claimant basis and exclude external reinsurance assumed and participation in residual market pools as claim frequency information is not available. The increases beginning in 2016 are due to the addition of a national account with higher frequency yet lower severity than the existing book of business for accident years 2016 through 2019.
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2012201320142015201620172018201920202021
2012$5.5 $18.8 $36.0 $50.8 $67.4 $75.8 $86.4 $90.8 $93.2 $93.9 
20134.0 13.6 34.4 58.5 76.1 85.1 86.9 88.1 90.4 
20145.8 15.8 32.0 52.8 73.5 82.8 88.9 94.9 
20156.3 16.0 29.5 47.4 64.5 70.7 75.0 
20167.1 18.5 34.8 47.7 58.0 66.9 
20175.7 25.9 50.1 76.9 95.5 
20186.9 28.8 48.9 70.9 
20196.4 29.5 53.6 
20204.2 12.5 
20215.7 
$659.7 (B)
Net incurred claims and allocated claim adjustment expenses (A)$1,139.3 
Less: net paid claims and allocated claim adjustment expenses (B)659.7 
Sub-total479.6 
All outstanding liabilities before 2012, net of reinsurance151.1 
Liabilities for claims and allocated claim adjustment expenses, net of reinsurance$630.7 
Commercial Automobile
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2021
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported ClaimsCumulative Number of Reported Claims*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2012201320142015201620172018201920202021
2012$622.5 $619.6 $603.9 $575.0 $573.1 $558.6 $558.0 $552.1 $551.4 $553.2 $4.1 98,053
2013661.5 665.4 668.5 669.6 659.7 646.4 633.4 632.5 634.7 8.5 96,998
2014687.8 689.2 691.7 688.0 688.6 687.8 683.8 683.0 11.4 103,235
2015712.4 710.5 729.7 721.4 720.7 703.4 700.6 6.3 104,804
2016755.9 768.9 786.0 780.8 779.3 762.1 15.3 110,708
2017788.7 819.1 869.2 874.4 867.9 32.5 117,518
2018883.2 947.9 989.9 992.1 46.4 129,003
2019931.1 959.7 954.8 58.6 138,056
2020941.1 913.7 116.9 116,059
2021989.4 128.3 103,795
$8,052.0 (A)
* Reported claims are accumulated on an individual claimant basis and exclude external reinsurance assumed and participation in residual market pools as claim frequency information is not available.
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2012201320142015201620172018201920202021
2012$229.0 $351.4 $442.9 $498.6 $525.9 $539.1 $543.9 $545.3 $545.5 $546.5 
2013248.3 398.1 511.0 578.1 611.5 622.9 626.3 619.5 620.9 
2014267.4 430.5 536.9 605.4 640.3 664.9 658.4 664.3 
2015265.1 438.9 541.8 626.2 669.7 680.6 687.3 
2016290.2 469.6 585.1 677.8 710.8 725.5 
2017307.9 512.0 657.1 746.5 791.2 
2018330.0 557.5 730.4 836.7 
2019330.4 549.0 681.6 
2020290.1 464.3 
2021302.7 
$6,321.4 (B)
Net incurred claims and allocated claim adjustment expenses (A)$8,052.0 
Less: net paid claims and allocated claim adjustment expenses (B)6,321.4 
Sub-total1,730.6 
All outstanding liabilities before 2012, net of reinsurance5.9 
Liabilities for claims and allocated claim adjustment expenses, net of reinsurance$1,736.5 
The following represents a reconciliation of the incurred and paid loss development tables to total claim and loss adjustment expense reserves as reported in the consolidated balance sheets.
December 31,
20212020
Net claim and allocated loss adjustment expense reserves:
Workers' compensation (a)$2,955.6 $3,044.1 
General liability630.7 641.5 
Commercial automobile1,736.5 1,591.5 
Three above coverages combined5,322.8 5,277.2 
Other short-duration insurance coverages979.3 782.4 
Subtotal6,302.2 6,059.7 
Reinsurance recoverable on claim reserves:
Workers' compensation1,937.4 1,885.0 
General liability693.6 667.9 
Commercial automobile1,113.5 788.3 
Three above coverages combined3,744.7 3,341.3 
Other short-duration insurance coverages376.2 303.8 
Subtotal4,120.9 3,645.1 
Insurance coverages other than short-duration674.1 654.5 
Unallocated loss adjustment expense reserves328.2 311.6 
1,002.4 966.2 
Gross claim and loss adjustment expense reserves$11,425.5 $10,671.0 
__________

(a) Long-term disability type workers' compensation reserves are discounted to present value based on interest rates generally ranging from 3.0% to 4.0%. The amount of discount reflected in the year-end net reserves totaled $174.8 and $196.9 as of December 31, 2021 and 2020, respectively. Interest accretion of $42.0, $35.7 and $34.5 for the years ended December 31, 2021, 2020, and 2019, respectively, was recognized as unfavorable development of prior year reserves within benefits, claims and settlement expenses in the consolidated statements of income.

The table below is supplementary information and presents the historical average annual percentage payout of incurred claims by age, net of reinsurance.
Supplementary Information (Unaudited)
Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
Workers' compensation15.6 %22.8 %13.9 %8.4 %5.3 %3.3 %2.8 %1.7 %1.1 %.9 %
General liability5.2 %11.9 %16.3 %17.5 %15.4 %8.0 %5.4 %3.6 %2.3 %.8 %
Commercial automobile36.1 %22.9 %16.0 %10.8 %5.2 %2.3 %.4 %— %.1 %.2 %