Case Reserve

A case reserve is the estimated future cost an adjuster assigns to an individual open claim after reviewing its facts — the injury or damage severity, medical or repair estimates, wage loss, and litigation posture. Unlike IBNR, which is an aggregate actuarial provision for claims not yet individually identified, a case reserve is claim-specific: one number for one file. Together, paid amounts plus case reserves plus IBNR make up an insurer's total incurred losses for a period.

Case reserves matter to a small-business buyer because they hit your record the moment a claim is set up, long before any settlement. Every open claim's case reserve flows onto your loss run as incurred loss, and in workers' comp it feeds the experience modifier that adjusts your premium for three years. An over-conservative reserve on a claim that ultimately settles cheaply can inflate your loss ratio and cost you real money at renewal, so many businesses actively monitor open reserves and ask adjusters to justify large ones.

A practical nuance: case reserves are living estimates that move through loss development. Adjusters raise them when new information (surgery, attorney involvement, permanent disability) appears and lower them as risk resolves; when the claim finally closes, the reserve drops to zero and the paid amount reflects the true cost. Because reserves are judgment calls, they can be too high or too low — a pattern of insufficient case reserves across a carrier's book signals reserve deficiency, while stale, un-reduced reserves on effectively finished claims are worth challenging. If you spot an open claim on your loss run that should be closed, request a reserve review before your mod-year valuation date.