Insurer Claim Investigation and Case Reserves

B

The statement "If claims have been reported to the insurer after the contract period, it may take several months for the insurer to investigate and establish a case reserve for reported claims" is generally true.

Insurance policies typically have a specified contract period, which is the duration of time that the policy is in effect. Claims reported after the contract period may not be covered under the policy, depending on the specific terms and conditions of the policy.

If a claim is reported after the contract period and it is determined to be covered under the policy, the insurer will initiate an investigation to assess the extent of damages and liability. This investigation may involve obtaining documentation and statements from the policyholder and any other relevant parties.

The insurer will also establish a case reserve, which is an estimate of the amount of money that will be needed to pay out the claim. The case reserve is typically based on the information gathered during the investigation, as well as any available data regarding similar claims.

Establishing a case reserve can take several months because the investigation process may be lengthy and complex, depending on the nature and complexity of the claim. Additionally, the insurer will need to ensure that it has sufficient funds available to cover the potential payout, which may involve adjusting its financial reserves or seeking reinsurance.

In summary, the statement is generally true because it can take several months for the insurer to investigate and establish a case reserve for reported claims that are covered under the policy and reported after the contract period. However, the specific time frame may vary depending on the circumstances of the claim and the insurer's internal processes.