SOFA-CFE · Question #57
Loss reserves that are not established on a claim number basis are identified as bulk reserves.
The correct answer is A. True. Option A is correct because "bulk reserves" is the standard industry term for loss reserves that are set up in aggregate rather than tied to a specific, individual claim number. These include reserves for incurred-but-not-reported (IBNR) claims and development reserves applied…
Question
Loss reserves that are not established on a claim number basis are identified as bulk reserves.
Options
- ATrue
- BFalse
How the community answered
(59 responses)- A71% (42)
- B29% (17)
Explanation
Option A is correct because "bulk reserves" is the standard industry term for loss reserves that are set up in aggregate rather than tied to a specific, individual claim number. These include reserves for incurred-but-not-reported (IBNR) claims and development reserves applied to groups of claims - situations where there is no single claim file to attach the reserve to.
Option B is wrong because the statement precisely matches the accepted definition. There is no ambiguity here - reserves are classified by whether they are claim-specific or not, and "bulk" is the established label for the non-claim-specific category.
Memory tip: Think of "bulk" like buying in bulk at a warehouse store - you're dealing with a quantity all at once, not item by item. Bulk reserves cover losses en masse, not claim by claim.
Community Discussion
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