A schedule illustrating the percentage of loss dollars actually paid in settlement
of claims over time. For example, less than 25 percent of the total loss dollars
for workers compensation claims are paid during the first year of coverage.
The final claim costs are usually not completely settled until year 10. General
liability losses have a payout that is even slower than workers compensation.
As a result, many insureds choose insurance options that allow them to retain
control of loss reserves and therefore the income accrued on the reserves while
waiting for the claim to be paid.
Links for IRMI Online Subscribers Only: