Reviewed by Apex Insurance Brokers · Last reviewed 2026-06-22
Reviewed by Apex Insurance Brokers · Last reviewed 2026-06-22
~2 min read
Reviewed by Apex Insurance Brokers · Last reviewed 2026-06-22
Category: Reserving · Reviewed by Jake Leat, Associate Director · Last reviewed
A case reserve is the amount set aside by an insurer in respect of a specific reported open claim, representing the estimated ultimate cost of settling that claim. It is the building block of the Outstanding Claims Reserve (OCR).
Setting principles
Best estimate — neither prudent nor optimistic; intended to reflect the most likely settlement value.
Including allocated loss adjustment expense (ALAE) — defence costs, expert fees, third-party costs assignable to the specific claim.
Excluding unallocated loss adjustment expense (ULAE) — internal handling costs, reserved separately as a bulk reserve.
Net of recoveries anticipated from subrogation, salvage, contribution, but only when reasonably certain.
Common biases
Initial reserve anchoring — first reserve set when limited information is available tends to underestimate.
Closure bias — late-development re-opening of “closed” claims.
Heavy-end optimism — large complex claims tend to under-reserve early.
Reserve fatigue — long-tail claims that sit in the same reserve for years often need increasing as plaintiff strategy develops.
Periodic peer review and statistical pattern monitoring address these biases.
Our service promise. We acknowledge every quote request the same working day. For straightforward risks, indicative terms typically follow within five working days. Complex risks — higher-risk buildings, cladding, mid-term proposals requiring fresh underwriting — may take longer; we’ll send you a progress note by the end of the fifth working day in those cases.
