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Losses, Claims and Settlement Expenses
12 Months Ended
Dec. 31, 2022
Insurance [Abstract]  
Losses, Claims and Settlement Expenses
The following table shows changes in aggregate reserves for the Company's loss and loss adjustment expenses:

Years Ended December 31:202220212020
Gross reserves at beginning of year$11,425.5 $10,671.0 $9,929.5 
Less: reinsurance losses recoverable4,125.3 3,650.5 3,249.7 
Net reserves at beginning of year:
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 
Incurred loss and loss adjustment expenses:
Provisions for insured events of the current year:
General Insurance2,545.1 2,418.3 2,380.5 
Title Insurance139.6 160.6 117.2 
RFIG Run-off17.5 19.3 48.8 
Other8.7 12.0 11.2 
Sub-total2,711.1 2,610.4 2,557.8 
Change in provision for insured events of prior years:
General Insurance(193.1)(137.9)(27.4)
Title Insurance(50.4)(47.6)(41.8)
RFIG Run-off(35.1)(21.1)(11.9)
Other(3.9)(3.9)(2.5)
Sub-total(282.6)(210.6)(83.8)
Total incurred loss and loss adjustment expenses2,428.4 2,399.7 2,474.0 
Payments:
Loss and loss adjustment expenses attributable to
   insured events of the current year:
General Insurance834.4 781.5 783.2 
Title Insurance13.1 21.4 4.6 
RFIG Run-off.2 .2 1.1 
Other4.8 7.7 6.4 
Sub-total852.7 810.9 795.5 
Loss and loss adjustment expenses attributable to
   insured events of prior years:
General Insurance1,279.8 1,239.8 1,263.1 
Title Insurance57.3 53.4 45.4 
RFIG Run-off15.5 14.3 27.0 
Other1.3 1.3 2.0 
Sub-total1,354.0 1,309.0 1,337.7 
Total payments2,206.7 2,120.0 2,133.2 
Net reserves at end of year:
General Insurance6,824.8 6,587.0 6,328.0 
Title Insurance612.8 594.2 556.1 
RFIG Run-off77.9 111.2 127.6 
Other6.3 7.6 8.6 
Sub-total7,521.9 7,300.2 7,020.4 
Reinsurance losses recoverable4,699.5 4,125.3 3,650.5 
Gross reserves at end of year$12,221.5 $11,425.5 $10,671.0 

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 3.9%, 3.0%, and 1.3% for 2022, 2021 and 2020, respectively, with average favorable annual developments of 2.7%. 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.

In 2022, General Insurance favorable development was higher due predominantly to better than expected claims experience from lower frequency of claims than expected related to commercial automobile and workers' compensation reserves and occurred in most years between 2009 and 2021. 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, 2022 and 2021, Old Republic's aggregate indemnity and loss adjustment expense reserves specifically identified with A&E exposures amounted to approximately $121.3 and $118.1 gross, respectively, and $84.0 and $77.2 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, 2022, 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 6.4 years (gross) and 7.6 years (net of reinsurance) as of December 31, 2022 and 5.9 years (gross) and 6.8 years (net of reinsurance) as of December 31, 2021. 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, 2022, incurred A&E claim and related loss settlement costs have averaged .4% of average annual General Insurance loss and loss adjustment expenses.
The following represents the Company's incurred and paid loss development tables for the major types of insurance coverages as of December 31, 2022. The information about incurred and paid claims development for the years ended December 31, 2013 to 2021 is presented as supplementary information.
Workers' Compensation
Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2022
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported LossesCumulative Number of Reported Losses*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2013201420152016201720182019202020212022
2013$700.9 $705.3 $716.9 $722.7 $726.3 $717.2 $689.7 $691.0 $686.7 $673.5 $62.0 49,035
2014780.9 792.8 786.4 784.9 777.0 763.3 724.4 705.4 685.8 70.9 54,170
2015794.3 792.6 787.3 785.5 769.1 742.4 695.8 659.8 106.3 55,220
2016756.1 752.9 745.7 730.5 712.6 692.8 624.2 144.8 52,477
2017727.0 713.9 700.3 683.4 676.3 654.2 144.9 51,764
2018698.6 691.5 681.0 665.9 644.8 179.0 52,339
2019664.6 657.4 653.2 667.5 167.2 51,806
2020560.9 569.4 571.7 166.8 45,725
2021500.3 502.4 201.2 46,140
2022488.1 271.9 35,429
Total$6,172.4 (A)
* Reported losses 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 Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2013201420152016201720182019202020212022
2013$107.6 $274.3 $381.2 $449.8 $501.9 $526.8 $547.0 $558.3 $565.4 $571.3 
2014116.9 293.7 397.1 466.0 499.5 524.8 544.9 554.6 561.0 
2015109.0 274.9 379.3 435.1 466.7 484.7 499.8 507.3 
2016102.5 253.5 334.4 383.5 408.4 425.2 435.8 
201799.6 244.6 334.8 383.1 414.3 444.1 
201894.8 240.6 320.5 367.2 396.8 
2019102.9 239.8 329.6 382.3 
202084.3 211.6 284.3 
202180.1 187.8 
202274.2 
Total$3,845.2 (B)
Net incurred loss and allocated loss adjustment expenses (A)$6,172.4 
Less: net paid loss and allocated loss adjustment expenses (B)3,845.2 
Sub-total2,327.1 
All outstanding liabilities before 2013, net of reinsurance737.2 
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance$3,064.4 
General Liability
Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2022
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported LossesCumulative Number of Reported Losses*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2013201420152016201720182019202020212022
2013$95.7 $96.7 $96.5 $107.8 $106.7 $106.0 $101.4 $102.2 $101.7 $104.0 $8.0 5,546
2014107.0 110.4 109.4 111.0 117.0 117.1 112.3 112.8 115.6 9.6 6,035
201596.0 96.3 99.2 102.3 104.8 105.8 99.8 99.2 13.2 5,601
201692.4 96.7 98.8 100.3 101.0 104.4 98.8 18.7 83,281
2017111.2 121.4 129.6 132.8 135.2 138.0 15.1 460,510
2018120.5 119.7 125.1 135.5 141.9 27.0 461,993
2019133.5 131.9 138.7 146.0 44.4 375,893
2020112.4 111.7 114.9 64.6 6,012
202194.2 92.7 55.2 5,821
202297.8 69.9 4,274
$1,149.4 (A)
* Reported losses are accumulated on an individual claimant basis and exclude external reinsurance assumed and participation in residual market pools as loss 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 Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2013201420152016201720182019202020212022
2013$4.0 $13.6 $34.4 $58.5 $76.1 $85.1 $86.9 $88.1 $90.4 $93.5 
20145.8 15.8 32.0 52.8 73.5 82.8 88.9 94.9 98.9 
20156.3 16.0 29.5 47.4 64.5 70.7 75.0 79.9 
20167.1 18.5 34.8 47.7 58.0 66.9 71.9 
20175.7 25.9 50.1 76.9 95.5 105.3 
20186.9 28.8 48.9 71.0 91.0 
20196.4 29.5 53.4 72.1 
20204.2 12.4 28.5 
20215.6 14.7 
20226.4 
$662.7 (B)
Net incurred loss and allocated loss adjustment expenses (A)$1,149.4 
Less: net paid loss and allocated loss adjustment expenses (B)662.7 
Sub-total486.6 
All outstanding liabilities before 2013, net of reinsurance155.2 
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance$641.9 
Commercial Automobile
Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2022
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported LossesCumulative Number of Reported Losses*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2013201420152016201720182019202020212022
2013$661.5 $665.4 $668.5 $669.6 $659.7 $646.4 $633.4 $632.5 $634.7 $635.0 $7.5 96,999
2014687.8 689.2 691.7 688.0 688.6 687.8 683.8 683.0 682.1 9.0 103,240
2015712.4 710.5 729.7 721.4 720.7 703.4 700.6 699.9 3.0 104,820
2016755.9 768.9 786.0 780.8 779.3 762.1 754.9 7.6 110,746
2017788.7 819.1 869.2 874.4 867.9 847.1 11.3 117,601
2018883.2 947.9 989.9 992.1 976.1 25.0 129,137
2019931.1 959.7 954.8 947.4 44.8 138,529
2020941.1 913.7 854.0 84.9 117,312
2021989.4 954.6 105.5 123,462
20221,074.2 164.7 104,213
$8,425.6 (A)
* Reported losses 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 Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2013201420152016201720182019202020212022
2013$248.3 $398.1 $511.0 $578.1 $611.5 $622.9 $626.3 $619.5 $620.9 $622.5 
2014267.4 430.5 536.9 605.4 640.3 664.9 658.4 664.3 669.9 
2015265.1 438.9 541.8 626.2 669.7 680.6 687.3 693.0 
2016290.2 469.6 585.1 677.8 710.8 725.5 737.3 
2017307.9 512.0 657.1 746.5 791.2 814.1 
2018330.0 557.5 730.4 836.7 900.0 
2019330.4 549.0 681.6 787.2 
2020290.1 464.3 602.2 
2021302.7 508.6 
2022354.8 
$6,690.1 (B)
Net incurred loss and allocated loss adjustment expenses (A)$8,425.6 
Less: net paid loss and allocated loss adjustment expenses (B)6,690.1 
Sub-total1,735.5 
All outstanding liabilities before 2013, net of reinsurance11.8 
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance$1,747.3 
The following represents a reconciliation of the incurred and paid loss development tables to total loss and loss adjustment expense reserves as reported in the consolidated balance sheets.
December 31,
20222021
Net loss and allocated loss adjustment expense reserves:
Workers' compensation (a)$2,879.6 $2,955.6 
General liability641.9 630.7 
Commercial automobile1,747.3 1,736.5 
Other short-duration insurance coverages1,260.0 979.3 
Subtotal6,529.0 6,302.2 
Reinsurance recoverable on loss reserves:
Workers' compensation1,975.5 1,937.4 
General liability785.3 693.6 
Commercial automobile1,486.6 1,113.5 
Other short-duration insurance coverages447.7 376.2 
Subtotal4,695.3 4,120.9 
Insurance coverages other than short-duration656.6 674.1 
Unallocated loss adjustment expense reserves340.5 328.2 
997.1 1,002.4 
Gross loss and loss adjustment expense reserves$12,221.5 $11,425.5 
__________

(a) Certain 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 $184.7 and $174.8 as of December 31, 2022 and 2021, respectively. Interest accretion of $9.6, $42.0 and $35.7 for the years ended December 31, 2022, 2021, and 2020, respectively, was recognized as unfavorable development of prior year reserves within loss and loss adjustment expenses in the consolidated statements of income.

The table below is supplementary information and presents the historical average annual percentage payout of incurred losses by age, net of reinsurance.
Supplementary Information (Unaudited)
Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
Workers' compensation15.7 %23.2 %14.0 %8.4 %5.1 %3.5 %2.5 %1.4 %1.0 %.9 %
General liability5.2 %11.3 %15.8 %17.2 %15.0 %7.8 %4.1 %3.8 %2.8 %3.0 %
Commercial automobile35.8 %23.2 %16.0 %11.1 %5.5 %2.3 %.5 %.2 %.5 %.3 %