What does Loss Reserve mean? Read on to discover the definition & meaning of the term Loss Reserve - to help you better understand the language used in insurance policies.
A loss reserve is an estimation of the amount an insurer would need to pay for future claims on insurance policies it underwrites. When underwriting a new policy, an insurance company takes into account two figures: an asset (the premium to be paid by the policyholder) and a claim obligation (liability for a future claim). The company sets up a loss reserve fund of usually liquid assets to cover the latter.
We hope the you have a better understanding of the meaning of Loss Reserve.