For two decades, P&C reserve actuaries could treat medical inflation as a slow-moving variable. That assumption has stopped working — and traditional tail-factor calibration approaches are producing reserve estimates with materially understated tails. This piece walks through what we are seeing in client engagements and how reserving committees should be re-thinking their assumption-setting cadence.
Article · Actuarial Solutions
P&C Reserve Volatility in a Non-Stationary Medical Inflation Regime
Workers' compensation and bodily injury reserves are showing more volatility than in any cycle since the early 2000s. Why traditional tail-factor calibration is breaking down.
George Omondi
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November 4, 2025
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7 min read