Adjusting and Others (AO) Reserves

A

The statement is false.

When it comes to reserving methods in insurance, the calendar year paid-to-paid method is typically used for Inflation in Defense & Cost Containment (DCC) reserves, while the accident year paid-to-paid method is used for Adjusting and Others (AO) reserves.

The calendar year paid-to-paid method calculates reserves based on the calendar year in which the claim is paid. It considers the total amount of payments made during a specific calendar year for claims that arose in different accident years. This method is commonly used for reserving for inflation because it takes into account the overall cost trends over time.

On the other hand, the accident year paid-to-paid method calculates reserves based on the accident year in which the claim occurred. It considers the payments made during a specific accident year for claims that arose in the same accident year. This method is typically used for Adjusting and Others (AO) reserves because it focuses on the claims that pertain to a specific accident year and helps in estimating the ultimate cost of those claims.

In summary, the calendar year paid-to-paid method is used for Inflation in Defense & Cost Containment (DCC) reserves, while the accident year paid-to-paid method is used for Adjusting and Others (AO) reserves. Therefore, the given statement that AO reserves are often provided for by using the calendar year paid-to-paid method is false.