The Reserve
With most carriers, the general reserving philosophy is the "Most Probable Outcome” payout of the claim and not necessarily the worst case scenario. In most cases, you will want to reserve an individual exposure based on what the best estimate is of its most probable outcome based on the information available at the time the reserve is being set. As the investigation advances you want to reevaluate the reserve. The reserve should factor in but not be limited to:
• Amount of estimated damages
• Anticipated / updated payout
• Depreciation expected on an ACV policy
• Deductible
• Coinsurance
• Expected payout supported by the documentation or will there be
• Other contributing coverage’s
• Probable, proper and likely negotiations to resolve the claim
• Policy limits – this obviously would place a maximum on the reserve amount
• What coverage items are involved, personal property, building, income loss, value of vehicle, loss of use, rental etc.
• Possible Supplements
And more, depending on your claims reserving best practices
• Amount of estimated damages
• Anticipated / updated payout
• Depreciation expected on an ACV policy
• Deductible
• Coinsurance
• Expected payout supported by the documentation or will there be
• Other contributing coverage’s
• Probable, proper and likely negotiations to resolve the claim
• Policy limits – this obviously would place a maximum on the reserve amount
• What coverage items are involved, personal property, building, income loss, value of vehicle, loss of use, rental etc.
• Possible Supplements
And more, depending on your claims reserving best practices
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