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Reserve for Property and Casualty Insurance Claims and Claims Expense
 12 Months Ended
Dec. 31, 2024
Reserve for Property-Liability Insurance Claims and Claims Expense  
Reserve for Property and Casualty Insurance Claims and Claims Expense
Note 10Reserve for Property and Casualty Insurance Claims and Claims Expense
The Company establishes reserves for claims and claims expense on reported and unreported claims of insured losses. The Company’s reserving process considers known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in laws and regulations, judicial decisions and economic conditions.
When the Company experiences changes in the mix or type of claims or changing claim settlement patterns or data, it applies actuarial judgment in the determination and selection of development factors to develop reserve liabilities. Inflation and a higher mix of more complex repairs, combined with skilled labor shortages, have increased physical damage loss costs. Medical inflation, increased treatment trends, higher attorney representation, rising litigation costs and more severe accidents have contributed to higher third-party bodily injury loss costs. The Company continues to digitize and modernize claim processes to
increase effectiveness and efficiency. These factors may lead to historical development trends being less predictive of future loss development, potentially creating additional reserve variability. Generally, the initial reserves for a new accident year are established based on claim frequency and severity assumptions for different business segments, lines and coverages based on historical relationships to relevant inflation indicators. Reserves for prior accident years are statistically determined using several different actuarial estimation methods. Changes in auto claim frequency may result from changes in mix of business, driving behaviors, miles driven or other factors. Changes in auto current year claim severity are generally influenced by inflation in the medical and auto repair sectors, changes in attorney represented and litigated claim behavior, the effectiveness and efficiency of claim settlements and changes in mix of claim types. When changes in claim data occur, actuarial judgment is used to determine appropriate development factors to establish reserves. The Company’s reserving process incorporates changes in loss patterns, operational statistics and changes in
claims reporting processes to determine its best estimate of recorded reserves.
As part of the reserving process, the Company may also supplement its claims processes by utilizing third-party adjusters, appraisers, engineers, inspectors and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process.
Because reserves are estimates of unpaid portions of losses that have occurred, including IBNR losses, the establishment of appropriate reserves, including reserves for catastrophes, Run-off Property-Liability and reinsurance and indemnification recoverables, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates.
The highest degree of uncertainty is associated with reserves for losses incurred in the initial reporting period as it contains the greatest proportion of losses that have not been reported or settled as well as heightened uncertainty for claims that involve litigation
or take longer to settle during periods of rapidly increasing loss costs. The Company also has uncertainty in the Run-off Property-Liability reserves that are based on events long since passed and are complicated by lack of historical data, legal interpretations, unresolved legal issues and legislative intent based on establishment of facts.
The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in property and casualty insurance claims and claims expense in the Consolidated Statements of Operations in the period such changes are determined.
Management believes that the reserve for property and casualty insurance claims and claims expense, net of recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the Consolidated Statements of Financial Position based on available facts, laws and regulations.
Rollforward of reserve for property and casualty insurance claims and claims expense
($ in millions)202420232022
Balance as of January 1$39,858 $37,541 $33,060 
Less recoverables (1)
8,396 9,176 9,479 
Net balance as of January 131,462 28,365 23,581 
Incurred claims and claims expense related to:
Current year40,043 40,521 35,523 
Prior years(308)549 1,741 
Total incurred39,735 41,070 37,264 
Claims and claims expense paid related to:
Current year(23,488)(23,607)(20,739)
Prior years(14,394)(14,366)(11,741)
Total paid(37,882)(37,973)(32,480)
Net balance as of December 3133,315 31,462 28,365 
Plus recoverables8,602 8,396 9,176 
Balance as of December 31$41,917 $39,858 $37,541 
(1)Recoverables comprises reinsurance and indemnification recoverables. See Note 12 for further details.
Reconciliation of total claims and claims expense incurred and paid by coverage
December 31, 2024
($ in millions)IncurredPaid
Allstate Protection
Auto insurance - liability coverage$15,666 $(13,342)
Auto insurance - physical damage coverage8,238 (8,351)
Homeowners insurance8,157 (8,201)
Total auto and homeowners insurance 32,061 (29,894)
Other personal lines2,270 (1,758)
Commercial lines616 (838)
Other business lines
310 (276)
Protection Services
547 (540)
Run-off Property-Liability59 (89)
Unallocated loss adjustment expenses (“ULAE”)3,480 (3,443)
Claims incurred and paid from before 2020335 (819)
Other (1)
57 (225)
Total$39,735 $(37,882)
(1)Paid and incurred amounts primarily related to the effect of foreign currency translation adjustments.
Incurred claims and claims expense represents the sum of paid losses, claim adjustment expenses and reserve changes in the calendar year. This expense includes losses from catastrophes of $4.96 billion, $5.64 billion and $3.11 billion in 2024, 2023 and 2022, respectively, net of recoverables. Catastrophes are an inherent risk of the property and casualty insurance business that have contributed to, and will continue to contribute to, material year-to-year fluctuations in the Company’s results of operations and financial position.
The Company defines a “catastrophe” as an event that produces pre-tax losses before reinsurance in excess of $1 million and involves multiple first-party policyholders, or a winter weather event that produces a number of claims in excess of a preset, per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event. Catastrophes are caused by various natural events including high winds, winter storms and freezes, tornadoes, hailstorms, wildfires, tropical storms, tsunamis, hurricanes, earthquakes and volcanoes.
The Company is also exposed to man-made catastrophic events, such as certain types of terrorism, civil unrest, wildfires or industrial accidents. The nature and level of catastrophes in any period cannot be reliably predicted.
The Company calculates and records a single best reserve estimate for losses from catastrophes, in conformance with generally accepted actuarial standards. As a result, management believes that no other estimate is better than the recorded amount. Due to the uncertainties involved, including the factors described above, the ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates.
Prior year reserve reestimates included in claims and claims expense (1)
For the years ended December 31,
Non-catastrophe lossesCatastrophe lossesTotal
($ in millions)202420232022202420232022202420232022
Auto$(328)$294 $1,249 $(36)$(50)$(64)$(364)$244 $1,185 
Homeowners(73)66 123 (322)36 77 (395)102 200 
Other personal lines224 37 (34)(7)(18)2 217 19 (32)
Commercial lines171 76 273 (5)8 (1)166 84 272 
Other business lines
— 12 (10)— — 4 — 12 (6)
Run-off Property-Liability (2)
68 89 125 — — — 68 89 125 
Protection Services
— (1)(3)— — — — (1)(3)
Total prior year reserve reestimates$62 $573 $1,723 $(370)$(24)$18 $(308)$549 $1,741 
(1)Favorable reserve reestimates are shown in parentheses.
(2)The Company’s 2024, 2023 and 2022 annual reserve review, using established industry and actuarial best practices, resulted in unfavorable reestimates of $58 million, $80 million and $118 million, respectively.
The following presents information about incurred and paid claims development as of December 31, 2024, net of recoverables, as well as the cumulative number of reported claims and the total of IBNR reserves plus expected development on reported claims included in the net incurred claims amounts. See Note 2 for the accounting policy and methodology for determining reserves for claims and claims expense, including both reported and IBNR claims. The cumulative number of reported claims is identified by coverage and excludes reported claims for industry pools and facilities where information is not available. The information about incurred and paid claims development for the 2020 to 2024 years, and the average annual percentage payout of incurred claims by age as of December 31, 2024, is presented as required supplementary information.
Auto insurance – liability coverage
($ in millions, except number of reported claims)
Incurred claims and allocated claim adjustment expenses, net of recoverables
IBNR reserves plus expected development on reported claims
Cumulative number of reported claims (in thousands)
For the years ended December 31,Prior year reserve reestimatesAs of December 31, 2024
(unaudited)(unaudited)(unaudited)(unaudited)
Accident year20202021202220232024
2020$8,667 $8,565 $8,808 $8,819 $8,840 $21 $541 2,075 
2021— 10,448 10,897 11,217 11,272 55 1,180 2,439 
2022— — 13,282 13,281 13,538 257 2,465 2,607 
2023— — — 15,325 14,787 (538)4,927 2,583 
2024— — — — 15,871 10,669 2,316 
Total$64,308 $(205)
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2020 accident years
159 
Prior year reserve reestimates for ULAE(27)
Other10 
Total prior year reserve reestimates$(63)
Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
For the years ended December 31,
(unaudited)(unaudited)(unaudited)(unaudited)
Accident year20202021202220232024
2020$3,078 $5,750 $7,049 $7,867 $8,299 
2021— 3,569 7,333 9,147 10,092 
2022— — 4,458 9,086 11,073 
2023— — — 5,084 9,860 
2024— — — — 5,202 
Total$44,526 
All outstanding liabilities before 2020, net of recoverables
1,400 
Liabilities for claims and claim adjustment expenses, net of recoverables$21,182 
Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2024
1 year2 years3 years4 years5 years
After 5 years
Auto insurance – liability coverage
33.3 %32.5 %15.2 %8.8 %4.9 %5.3 %
Auto insurance – physical damage coverage
($ in millions, except number of reported claims)Incurred claims and allocated claim adjustment expenses, net of recoverablesIBNR reserves plus expected development on reported claims
Cumulative number of reported claims (in thousands)
For the years ended December 31,Prior year reserve reestimatesAs of December 31, 2024
(unaudited)(unaudited)(unaudited)(unaudited)
Accident year20202021202220232024
2020$5,434 $5,359 $5,332 $5,327 $5,328 $1 $3 4,042 
2021— 7,226 7,254 7,216 7,221 5 1 4,633 
2022— — 9,308 8,996 9,037 41 (7)4,977 
2023— — — 9,422 9,081 (341)(5)4,799 
2024— — — — 8,532 719 4,222 
Total$39,199 $(294)
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2020 accident years
(1)
Prior year reserve reestimates for ULAE(5)
Other(1)
Total prior year reserve reestimates$(301)
Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
For the years ended December 31,
(unaudited)(unaudited)(unaudited)(unaudited)
Accident year20202021202220232024
2020$5,079 $5,361 $5,335 $5,327 $5,325 
2021— 6,794 7,297 7,241 7,220 
2022— — 8,252 9,087 9,044 
2023— — — 8,482 9,086 
2024— — — — 7,813 
Total$38,488 
All outstanding liabilities before 2020, net of recoverables
10 
Liabilities for claims and claim adjustment expenses, net of recoverables$721 

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2024
1 year2 years3 years4 years5 years
After 5 years
Auto insurance – physical damage coverage
93.1 %7.0 %(0.6)%(0.2)%— %0.7 %
Homeowners insurance
($ in millions, except number of reported claims)Incurred claims and allocated claim adjustment expenses, net of recoverablesIBNR reserves plus expected development on reported claims
Cumulative number of reported claims (in thousands)
For the years ended December 31,Prior year reserve reestimatesAs of December 31, 2024
(unaudited)(unaudited)(unaudited)(unaudited)
Accident year20202021202220232024
2020$5,685 $5,792 $5,882 $5,929 $5,948 $19 $77 992 
2021— 6,310 6,457 6,514 6,555 41 154 998 
2022— — 6,551 6,503 6,476 (27)257 794 
2023— — — 9,082 8,612 (470)795 1,026 
2024— — — — 8,594 2,851 993 
Total$36,185 $(437)
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2020 accident years
19 
Prior year reserve reestimates for ULAE22 
Other1 
Total prior year reserve reestimates$(395)
Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
For the years ended December 31,
(unaudited)(unaudited)(unaudited)(unaudited)
Accident year20202021202220232024
2020$4,209 $5,492 $5,734 $5,826 $5,871 
2021— 4,459 6,052 6,286 6,401 
2022— — 3,902 5,950 6,219 
2023— — — 5,788 7,817 
2024— — — — 5,743 
Total$32,051 
All outstanding liabilities before 2020, net of recoverables
132 
Liabilities for claims and claim adjustment expenses, net of recoverables$4,266 

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2024
1 year2 years3 years4 years5 years
After 5 years
Homeowners insurance66.6 %25.3 %3.9 %1.6 %0.8 %1.8 %
Reconciliation of the net incurred and paid claims development tables above to the reserve for property and casualty insurance claims and claims expense
($ in millions)As of December 31, 2024
Net outstanding liabilities
Allstate Protection
Auto insurance - liability coverage$21,182 
Auto insurance - physical damage coverage721 
Homeowners insurance4,266 
Other personal lines2,266 
Commercial lines1,654 
Other business lines
133 
Protection Services
53 
Run-off Property-Liability (1)
1,328 
ULAE1,709 
Other (2)
3 
Net reserve for property and casualty insurance claims and claims expense33,315 
Recoverables
Allstate Protection
Auto insurance - liability coverage6,958 
Auto insurance - physical damage coverage37 
Homeowners insurance523 
Other personal lines260 
Commercial lines299 
Other business lines
2 
Protection Services
15 
Run-off Property-Liability468 
ULAE40 
Total recoverables8,602 
Gross reserve for property and casualty insurance claims and claims expense$41,917 
(1)Run-off Property-Liability includes business in run-off with most of the claims related to accident years more than 40 years ago. IBNR reserves represent $723 million of the total reserves as of December 31, 2024.
(2)Related to the unamortized fair value adjustment related to the acquisition of National General.