Claims – Other Terms
A Reported Claim – this term is used when an insured person has advised the insurance company of a loss that took place. An example is reporting an accident to your car insurance company.
An Unreported Claim – is a claim that has not yet been reported after a loss was suffered where the loss took place within an accounting period for the Insurance Company. This becomes important when Insurance Companies have to report on their financial position as they need to place money in a fund for claims that will fall in the reported period. This is called Incurred but not Reported Losses. (See IBNR Losses)
A Closed Claim is a claim that has been settled by the Insurance Company, it is also called a resolved claim.
Claim Cost Inflation – this refers to the increase in the rate of claim payments and it usually refers to the increase in the average cost per claim.
Claim Frequency refers to the number of times an insured person has claimed against a policy within a specified period. As an example – an Insurance Company will report their average claim frequency as the total number of claims divided into the total number of policies for a financial year.
Claims Experience refers to the number and amount of claims handled by an Insurance Company during a specific period.