Case Reserving
The process of establishing a specific dollar reserve for an individual open claim, representing the estimated total cost to resolve that claim.
industryPublished 2026/06/07Last verified 2026/06/07
FAQs
- Who sets case reserves?
- The assigned claims adjuster typically sets and updates case reserves, subject to supervisory review above defined dollar thresholds. Actuaries review reserve adequacy in aggregate rather than file by file.
- What happens if case reserves are consistently too low?
- Chronic under-reserving results in adverse loss development, which surprises management and investors, distorts pricing decisions, and can trigger regulatory intervention. It also inflates reported profitability in early periods.
- How does AI improve case reserving?
- Predictive models analyze claim characteristics — injury type, jurisdiction, claimant demographics, litigation indicators — against historical outcomes to recommend reserve levels. This reduces adjuster-to-adjuster inconsistency and flags outlier reserves for supervisory review.
Related Terms
Bulk Reserving
A reserving method applying statistical factors to groups of claims rather than setting individual case reserves, used for high-volume low-severity lines.
IBNR Reserve
Incurred But Not Reported reserve: a liability estimate for losses that have occurred but have not yet been reported to the insurer.
Allocated Loss Adjustment Expense
Expenses directly attributable to a specific claim, such as attorney fees, independent adjuster fees, and expert witness costs.
Medical Case Management
A coordinated approach to managing injured claimants' medical care to promote appropriate treatment, recovery, and return to work while controlling claim costs.