insurance::claim-reserve

Claim Reserve

A financial provision set aside by an insurer to meet the estimated future cost of a reported but unsettled claim.

Canonical Definition

A claim reserve (also known as a case reserve or outstanding claims reserve) is the estimated amount set aside by an insurer to meet the future costs of a specific reported claim that has not yet been fully settled. It represents the insurer's best estimate of the ultimate liability for that claim at a given point in time and is carried as a liability on the balance sheet. Claim reserves are distinguished from IBNR reserves, which cover claims incurred but not yet reported. Reserves must be adequate, not excessive, and are subject to actuarial review and regulatory oversight. Source: CAS Statement of Principles Regarding Property and Casualty Loss and Loss Adjustment Expense Reserves; IAIS Insurance Core Principles.