Figure 15-8: Reductions
in claims payable, by size of loss. Ability of U.S. property-casualty insurance
sector, as a whole, to pay claims over a wide range of losses. The chart shows
four views, encompassing changes in capacity between 1991 and 1997 and whether
companies have access to resources of groups that own them. Groups are not obligated
to pay losses experienced by individual member firms but retain the option to
do so. Together, these four scenarios represent a range of ability to pay losses.
For example, for a US$155 billion loss yeara recent estimate of probable
maximum loss (PML) (GAO, 2000) could be several events combined, including weather-
and nonweather-related ones65 to 90% of claims would be paid (adapted from
Cummins et al., 1999). PML benchmarks are from GAO (2000).