Loss reserves: the single most consequential number on a self-insured balance sheet, explained without actuarial jargon.
Plain-English explainers on reserving methodology. A dated feed of what's actually moving loss development this quarter. Written for the CFOs, captive boards, and risk officers who own the number, not just the actuaries who calculate it.
By Sam, EditorBegin with the fundamentals.
Loss Reserves Explained: What They Are, How They Are Calculated, and Why They Matter
A loss reserve is the dollar estimate of what an insurer, captive, or self-insured entity still owes on claims that have already happened. Here is what sits inside that number, how actuaries arrive at it, and why it moves after you book it.
Read the explainerWhat's catching our eye this month.
Filter the feed by line of business or by reserving discipline.
Cook County's $28M Birth-Injury Verdict Tests OB Reserves
A Cook County jury awarded $28 million over a December 2023 delivery at University of Illinois Hospital, naming five physicians but not the hospital. The reserve question is who funds an employed-physician judgment, and how a lifetime care award moves with the discount rate.
October PPI Up 6.5% Year Over Year: Severity Trend Check
BLS reported on November 13 that final demand prices rose 0.3% in October and 6.5% over 12 months, with truck freight up 3.9% in the month. The argument here is narrower than the macro story: severity trend picks in reserve reports are refreshed once a year while inflation data arrives monthly, so test the pick against the print and apply a three-month confirmation rule before changing it.
Missouri's 0% Loss Cost Follows a 1.3% Rise, Splits by Class
Missouri's 0% NCCI loss cost filing for 2027 nets Manufacturing +1.2% and Miscellaneous +1.3% against Contracting -2.0%, while the state's 35.2% attorney involvement rate offsets falling frequency. The new argument: a self-insured should rebuild its prior from its own payroll mix, not import the flat headline.
October Jobs Add 165K and Rebuild the WC Payroll Base
BLS reported 165,000 October jobs on November 6 and revised August and September up 84,000. The reserve point is mix, not level: the added payroll sits in professional services, health care and warehousing, so a self-insured should re-weight its expected claim ratio by class rather than scale it up.
Claims-Made Coverage, Tail Coverage, and the Unreported Claims Liability Your Policy Does Not Hold
A claims-made policy covers claims reported during the policy period, so the claims that have happened but not yet been reported belong to the insured. How that tail liability arises, how it is estimated, and where it lands on the balance sheet of a hospital, physician group, or captive.
GASB Statement No. 10 and Claim Liabilities: How Governments and Public Entity Pools Recognize and Report IBNR
The governmental accounting rules behind the claims liability: when a self-insured government or risk pool must accrue, what goes into the number, how discounting is handled, and which note disclosures and schedules the actuarial report has to support.
IBNR, Explained Without the Jargon
What incurred-but-not-reported really means, why it is almost always the largest piece of a self-insured entity's reserves, and how to read an IBNR estimate without being an actuary.
Pure IBNR vs. Broad IBNR: Why the Distinction Matters More for Self-Insureds
The IBNR line on your actuarial report bundles two very different uncertainties into one number; understanding which piece is driving the estimate changes what you should ask and how you should fund.
How to Read a Loss Development Triangle
A loss triangle looks like a spreadsheet with a staircase cut out of it. Here is what the rows, columns, and diagonals are telling you, and what to look for before you trust the projection on the bottom line.
Point Estimate vs Range: Which One Should a Self-Insured Book?
A single-number reserve looks decisive. A range looks honest. The right choice depends on what you are using the estimate for, and the answer is rarely the middle of the range.
What a Reserve Review Should Cost: A Buyer's Guide to Actuarial Fees
Fee ranges by program type, the scope levers that move price up and down, and the red flags in a quote that looks too cheap or too expensive.
How to Write an RFP for a Reserve Review: A Buyer's Template
The sections an RFP actually needs, the data package to send with it, and what to leave out so the proposals you receive are comparable and the engagement runs clean.
IBNR for Public Entity Pools and JPAs: A Plain-English Guide for Pool Administrators and Member Finance Officers
What IBNR means for a public entity risk pool or joint powers authority, how actuaries handle member allocation and sovereign immunity, and what to require in the annual reserve study.
Commercial Auto and Fleet IBNR for Self-Insured Trucking, Delivery, and Transit
How actuaries estimate unpaid auto liability claims for self-insured fleets, why bodily injury severity dominates the reserve, and what to require in the report.
Hospital and Health System Professional Liability IBNR
How actuaries estimate unpaid medical professional liability claims for hospitals and health systems, why the captive structure creates a net-exceeds-gross wrinkle, and what to require in the report.
Public Entity General Liability IBNR: Municipalities, Schools, and Special Districts
How actuaries estimate unpaid general liability claims for public entities, why latent exposures and revival windows make the tail longer than it looks, and what to require in the report.
Workers Compensation IBNR for Self-Insured Employers
How actuaries estimate unpaid workers compensation claims for self-insured programs, what drives the number, and what to require in the report.
IBNR for Self-Funded Health Plans: A Plain-English Guide for Benefits CFOs and HR Directors
What IBNR means for a self-funded employer health plan, how actuaries estimate it, and what to expect from a reserve study.
Reading Your Captive's Annual Reserve Report: A Board Member's Guide
What a captive board member should read in the annual reserve report and Statement of Actuarial Opinion, the questions to ask the actuary, and the gross-ceded-net bridge every captive board must understand.
Captive Feasibility Studies: What the Actuary Contributes Before the Captive Exists
What the actuary contributes to a captive feasibility study: the pro forma loss pick, exposure base selection, retention analysis, confidence level capital sizing, and what the buyer should require from the report.
Captive Funding at a Confidence Level: How the Percentile Selection Drives the Capital Number
How actuaries fit aggregate loss distributions and select confidence levels for captive funding, why the variance assumption can drive the answer more than the chosen percentile, and what to require from the actuary's report on the funded amount.
Discounting Captive Reserves: Statutory, Tax, GAAP, and IFRS Compared
Why a captive's statutory, tax, GAAP, and IFRS reserve values differ for the same liabilities, how the discount is constructed in each framework, and what the board should require for reconciliation.
Cell Captives and Protected Cell Companies: How the Structure Changes the Reserving Problem
What a cell captive and a protected cell company actually are, how statutory ring-fencing affects reserving and capital sizing, and what to require from the actuary's report on a cell's reserve.
Loss Portfolio Transfers, Adverse Development Covers, and Captive Runoff: How Captives Close Out Retained Risk
How loss portfolio transfers, adverse development covers, and runoff work for captive insurers, the actuarial inputs that drive pricing, and what to require from the actuary during the transaction.
Claims Analytics and Loss Reduction: How Operational Data Lowers Future IBNR
What claims analytics actually is, how it differs from actuarial reserving, and the operational interventions that measurably reduce future losses for self-insured employers, captives, and risk pools.
Five Leading Indicators of Adverse Reserve Development: What Your TPA Already Tracks That Your Actuary May Not See
The five claim-level metrics that predict adverse reserve development 6 to 18 months before it shows up in your actuarial report, and how to ask your TPA for them.
What's Actually Driving Your IBNR Higher? A Claim-Level Diagnostic Guide for Risk Managers and CFOs
How to diagnose whether your adverse reserve development is coming from case reserves, payment patterns, or claim mix, and what to do about each one.
GASB Statement No. 10 and Claim Liabilities: How Governments and Public Entity Pools Recognize and Report IBNR
The governmental accounting rules behind the claims liability: when a self-insured government or risk pool must accrue, what goes into the number, how discounting is handled, and which note disclosures and schedules the actuarial report has to support.
When Self-Insured Reserves Hit the Financial Statements: ASC 450, ASC 944, and What the Auditor Is Actually Evaluating
The GAAP accrual rules for self-insured losses, how a range with a best estimate gets treated differently from a range without one, and what the external auditor is trying to conclude when they review your reserve number.
Audit Committee Reserve Governance: The Five Questions Every Committee Should Ask
What the audit committee needs to see on reserves, the five questions that should be asked every year, and how a CFO or risk manager prepares the packet that turns a technical topic into a governance conversation.
What Captive Domicile Regulators Look At: A Finance Officer's Survey of Vermont, Cayman, Bermuda, South Dakota, and Utah
What each major domicile actually examines in the annual filing, the reserve review requirements, solvency triggers, and what 'regulated but light' means in practice. For anyone choosing a domicile or considering a re-domicile.
Collateral and Surety for Self-Insured Workers Compensation: How Reserves Drive the Bond You Have to Post
How state workers comp bureaus set collateral requirements, why the number often exceeds the actuarial reserve, and how to negotiate with the bureau when the requirement feels disconnected from your actual exposure.
The §832 Deduction: What Makes Your Captive's Reserves Tax-Deductible
The risk shifting and risk distribution tests, what the IRS actually evaluates, how reserve methodology ties to deductibility, and what recent micro-captive rulings mean for conventional captive owners.
How Actuaries Estimate Your Unpaid Claims: A Buyer's Guide to the Five Core Methods
Every reserve estimate starts from one equation and five methods. Here is what each method assumes, when it works, when it breaks, and which one your actuary probably leaned on for the number you are signing off on.
Chain Ladder: How Actuaries Project Claims From Historical Patterns
The chain ladder is the most widely used reserving method, and the one most likely to produce the number on your balance sheet. Here is how it works, what it assumes, and where it fails.
Bornhuetter-Ferguson: The Method That Balances Past Data and Prior Expectation
BF blends the chain ladder's development pattern with an expected claim ratio, weighted by maturity. Here is how it works, what it assumes, and why it is the natural default for your most recent accident years.
Fronting, Reinsurance, and Why Your Captive's Net IBNR Can Exceed Gross
How gross, ceded, and net reserves should bridge in a fronted captive, why net IBNR can sometimes exceed gross, and the six questions to ask about your actuary's gross-to-net bridge.
Berquist-Sherman in Plain English
When your claims operation changes mid-stream, the historical triangle lies. Berquist-Sherman is the standard correction, and you should know what it does, what it assumes, and when to demand it.
ULAE and ALAE Reserves: The Cost of Handling Claims You Have Not Finished Paying
Loss adjustment expense is the cost of defending, investigating, and administering claims. Whether your reserve includes it, how it is estimated, and whether defense costs erode your retention are scope questions that can move the liability without a single claim changing.
The Reserving Briefing.
One email a week for self-insureds and captives. Reserving fundamentals, method notes, and commentary on what's actually moving loss development this quarter.