Reserve
A Reserve in insurance refers to funds that insurers set aside to ensure they can cover future obligations to policyholders. These funds are earmarked to pay for anticipated claims and related expenses. By maintaining reserves, insurers aim to guarantee they have adequate liquidity to fulfill their promises to policyholders promptly and effectively.
Reserves play a crucial role in ensuring financial stability and regulatory compliance for insurance companies. They are calculated based on actuarial assessments of potential liabilities, claims history, and economic factors. Regular monitoring and adjustment of reserves are essential to reflect changing risk profiles and ensure that insurers can meet their obligations over time.