Claims Reserve Adequacy Review
Case reserves are set by adjusters early in a claim's life based on the information available at the time, and they're supposed to get revised as the claim develops, but in practice reserve reviews happen on a fixed schedule or not at all until a claim closes, so a reserve set months ago on incomplete information can sit stale while the claim's actual trajectory has changed. Systematically under-reserved claims distort loss triangles and understate reserve adequacy at the portfolio level; systematically over-reserved ones tie up capital unnecessarily and distort the same triangles in the other direction — and both are hard for a reserving actuary to see file-by-file without a targeted review.
STARTING PRICE
From €799
Complex tier · Multi-system orchestration, custom logic, and higher-volume or higher-risk processing.
Get a quote →Saves roughly 7-12 hrs/week of manual reserve file review across the open claims book.
How the automation works
We compare each open claim's current case reserve against outcomes from comparable closed claims — same loss type, severity indicators, jurisdiction and claim characteristics — and flag files where the reserve looks materially out of line with what similar claims actually settled for, in either direction. Flags come with the comparable claims used and the reasoning, not just a variance number, so the reviewing adjuster or reserving actuary can judge whether the file is a genuine outlier or an actual reserve error. No reserve is changed automatically — every flag routes to a person for review, because a reserve adjustment has direct reporting and capital implications that need a professional's sign-off, not a model's.
Process flow
- 01
Open claim reserve reviewed trigger
Every open claim's case reserve is compared on a recurring cycle, not just at a fixed milestone or only before closing.
- 02
Find comparable claims ai
Closed claims with similar loss type, severity indicators, jurisdiction and claim characteristics are identified as the comparison set.
- 03
Compare reserve to comparable outcomes ai
The current reserve is compared against the settled outcomes of the comparable claim set, flagging material variance in either direction — under- or over-reserved.
- 04
Attach reasoning and comparables output
Each flag includes the specific comparable claims used and the variance reasoning, so the reviewer can evaluate the flag rather than just see a number.
- 05
Adjuster or actuary reviews output
A claims adjuster or reserving actuary reviews the flag and decides whether to adjust the reserve, leave it, or document why the file is a genuine outlier — no reserve changes automatically.
- 06
Log adjustment or rationale output
Any reserve change or a documented reason for leaving it unchanged is logged against the claim for audit and future model refinement.
Inputs
- Open claim case reserves and history
- Closed claim outcomes and characteristics
- Claim severity and jurisdiction data
- Prior reserve adjustment log
Outputs
- Reserve adequacy flags with comparables
- Under/over-reserved file reports
- Adjuster and actuary review decisions
- Reserve adjustment audit log
Works with
Prefer a fully custom build instead of an off-the-shelf integration? We scope both options during your free consultation — most jobs like this one work fine on standard connectors, but higher-volume or non-standard systems sometimes need bespoke API work, reflected in the complex tier.
Where this goes wrong if you get it wrong
- A single flagged file can look like an outlier when it's actually the leading edge of a genuine shift in claim severity for that loss type — treating every flag as an individual file error rather than also checking for a pattern across flags can miss a real trend that should inform the reserving methodology, not just one file's reserve.
- Comparable-claim matching that isn't controlled for jurisdiction will compare a claim's reserve against settlement outcomes from a state with very different liability law or damage caps, producing a variance flag that reflects a jurisdiction mismatch rather than an actual reserve error — the comparison set needs to be genuinely comparable, not just similar on paper.
- No reserve should change automatically off a comparable-claims flag, because reserve levels feed directly into regulatory financial statements and reinsurance triangle reporting — an automated adjustment without an actuary's or adjuster's sign-off creates a reporting integrity problem, not just a modeling convenience.
- Flagging only obviously stale reserves on old claims misses the more common failure mode: a reserve set correctly at first notice that never gets revised as new information — a specialist report, a liability admission, a treatment-cost escalation — actually changes the claim's trajectory; the review needs to run on a recurring cycle for every open claim, not just aged ones.
Frequently asked questions
Does this change reserve amounts automatically?
No. Every flag routes to an adjuster or reserving actuary who decides whether to adjust the reserve — reserve changes have direct financial reporting implications that need a professional's sign-off.
How are comparable claims selected?
By matching loss type, severity indicators, jurisdiction and other claim characteristics against closed claims, specifically controlling for jurisdiction so the comparison isn't distorted by different liability law or damage caps.
Does this only flag under-reserved claims?
No, it flags material variance in both directions — under-reserved claims that distort loss development the same way over-reserved ones tie up unneeded capital.
How often does the review run?
On a recurring cycle across the open claims book, not just at a fixed milestone or before closing, since a reserve can go stale any time new information changes a claim's trajectory.