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📊 '''Accident-year result''' is an [[Definition:Underwriting | underwriting]] performance metric that assigns all [[Definition:Premium | premiums]] and [[Definition:Loss | losses]] to the year in which the underlying events — typically [[Definition:Claim | claims]] — actually occurred, regardless of when those premiums were collected or claims were reported and paid. Unlike a [[Definition:Calendar-year result | calendar-year result]], which captures every financial transaction booked within a given twelve-month accounting period (including reserve adjustments on prior years' business), the accident-year view isolates the economics of a single policy period. This makes it a sharper tool for evaluating the true profitability of business written in a specific year, free from the noise of favorable or adverse [[Definition:Reserve development | reserve development]] on older books.

⚙️ Constructing an accident-year result requires an insurer to estimate the [[Definition:Ultimate loss | ultimate losses]] for each accident year, since many claims — particularly in long-tail lines such as [[Definition:General liability insurance | general liability]], [[Definition:Professional liability insurance | professional liability]], and [[Definition:Workers' compensation insurance | workers' compensation]] — will not be fully settled for years or even decades. [[Definition:Actuary | Actuaries]] apply techniques such as [[Definition:Loss development factor | loss development factors]] and [[Definition:Bornhuetter-Ferguson method | Bornhuetter-Ferguson methods]] to project how [[Definition:Incurred but not reported (IBNR) | incurred but not reported (IBNR)]] claims will emerge over time. The result is then expressed as an [[Definition:Accident-year loss ratio | accident-year loss ratio]] — the ratio of estimated ultimate losses to [[Definition:Earned premium | earned premiums]] for that year. The treatment of these estimates varies across accounting regimes: under [[Definition:US GAAP | US GAAP]], insurers commonly disclose accident-year loss ratios alongside calendar-year figures, while [[Definition:IFRS 17 | IFRS 17]] introduces its own measurement models that reshape how insurers present cohort-level profitability. [[Definition:Lloyd's of London | Lloyd's of London]] syndicates, operating on a three-year accounting cycle, also track accident-year development closely as part of their [[Definition:Reserving | reserving]] discipline.

💡 For senior management, investors, and [[Definition:Rating agency | rating agencies]], accident-year results offer a cleaner window into an insurer's current [[Definition:Underwriting performance | underwriting performance]] than calendar-year figures, which can be flattered or distorted by releases from — or charges to — prior-year [[Definition:Loss reserve | reserves]]. A company might report a strong calendar-year [[Definition:Combined ratio | combined ratio]] while its accident-year result deteriorates, signaling that today's business is being priced or underwritten less effectively than it appears. Regulators in markets governed by [[Definition:Solvency II | Solvency II]] or the [[Definition:National Association of Insurance Commissioners (NAIC) | NAIC's]] statutory framework also scrutinize accident-year trends when assessing reserve adequacy. In reinsurance negotiations, [[Definition:Reinsurer | reinsurers]] frequently demand accident-year triangles to evaluate the [[Definition:Ceding company | cedent's]] portfolio before agreeing to terms, making it a foundational element of market trust and transparency.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Calendar-year result]]
* [[Definition:Loss development factor]]
* [[Definition:Incurred but not reported (IBNR)]]
* [[Definition:Combined ratio]]
* [[Definition:Reserve development]]
* [[Definition:Underwriting-year result]]
{{Div col end}}

Definition:Accident-year result - Revision history

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