Claims Reserve

Published: | Updated: September 23, 2017

Definition - What does Claims Reserve mean?

A claims reserve is a money reserve an insurance company deliberately sets aside to use to pay unsettled claims in the future because it takes time to process claims and make sure they are covered and legitimate. Insurers use this fund to pay benefits to policyholders who file legitimate claims.

Insuranceopedia explains Claims Reserve

Because claims reserves are meant to pay for incurred but unsettled claims, they represent liabilities for an insurance company. In other words, they are potential financial obligations to policyholders. This money comes from premiums; however, it can be difficult to determine the amount to set aside for claims. Usually, insurers rely on past data on losses to statistically calculate a suitable and reasonable amount.

How Well Do You Know Your Life Insurance?

The more you know about life insurance, the better prepared you are to find the best coverage for you.

Whether you're just starting to look into life insurance coverage or you've carried a policy for years, there's always something to learn.

Share this:

Connect with us

Email Newsletter

Join thousands receiving the latest content and insights on the insurance industry.