Which of the following is the component of loss and loss adjustment liabilities are used in meeting the challenge?

Question

Options

• Acase reserves
• Bsupplement reserves
• Creopened claim reserves
• DAll of the above

• A
  11% (2)
• B
  5% (1)
• C
  16% (3)
• D
  68% (13)

Explanation

All three listed components - case reserves, supplemental reserves, and reopened claim reserves - are distinct but complementary parts of an insurer's total loss and loss adjustment expense (LAE) liability, which is why D is the only complete answer.

Case reserves (A) cover individual known claims where an adjuster has estimated the expected payout - essential, but they alone don't capture the full picture. Supplemental reserves (B) address development beyond case estimates and claims incurred but not yet fully developed - again necessary, but insufficient alone. Reopened claim reserves (C) account for claims previously closed that resurface with new damages or complications - real liabilities that must be carried, but only one piece of the puzzle. Each option in isolation omits significant liability exposure, making A, B, and C individually incomplete.

Memory tip: Think of the acronym CSR - Case, Supplement, Reopened - as the three legs of a stool. Remove any one leg and the stool (your total liability estimate) falls over. "All of the above" questions in reserving topics often signal that no single reserve type alone is sufficient.

No community discussion yet for this question.