What is involved in the 'claims reserving' process?

The claims reserving process primarily involves estimating and setting aside funds to pay future claims. This is a crucial aspect of insurance management as it ensures that an insurer has sufficient financial resources to cover liabilities that may arise from claims made by policyholders in the future.

Insurance companies use various methods and historical data to predict the costs related to claims that have already occurred but have not yet been settled. This includes known claims that are still in the adjustment phase and those that are incurred but not yet reported (IBNR). Proper claims reserving helps ensure the insurer's solvency and financial stability, as it accurately reflects the anticipated payouts that will be necessary over time.

While investigating claims for fraud, determining total premiums to be collected, and assessing the impact of claims on premiums are important activities within the insurance industry, they do not specifically pertain to the claims reserving process. These activities serve different functions within the overall risk management and financial planning strategies of an insurance company.