With claims, a reserve is an estimated amount of money set aside to pay on a claim. Before you can set reserves, you must add the coverages the claim is filed against. If you haven’t already added coverages, see Step 2 - Add coverages. You must set reserves before you can make a payment on the claim.
To set reserves, open the desired claim and:
- Select Accounting in the Claims menu. If you try to access Accounting without adding coverages, a Message pop-up window will open stating the following:
Note: You must choose at least one coverage to file against before entering any accounting information. A coverage may be chosen under the Information tab. You will be redirected there when you click OK.
- Navigate to and select the Overview collapsible box. The Coverage table(s) will appear below the Summary section, displaying each coverage added to the claim.
- Navigate to the Coverage table. In the Reserve column, you will see boxes next to Loss, Adjusting, and Legal.
Figure 1: View of a Coverage table.
- Type the reserve amount for each applicable reserve type in the corresponding box. As soon as you exit a box, the reserve updates. Use the below explanations to determine the types of reserves to set. These explanations are based on information compiled from the National Association of Commissioners’ (NAIC) Statutory Issue Paper, No, 55.
- Loss reserve - An estimate of the cost of the loss, not yet paid. The Loss Reserve includes repair costs of the damaged property and medical costs for injuries related to the loss.
- Adjusting reserve (A&O) - An estimate of the cost to the claims department to manage the claim. The Adjusting Reserve makes up a portion of the Loss Adjustment Expenses (LAE) and can include costs such as the fees and expenses of adjusters and settling agents.
- Legal reserve (DCC) - An estimate of the defense and cost containment fees for the claim, which often includes litigation related fees. The Legal Reserve makes up a portion of the Loss Adjustment Expenses (LAE) and can include costs such as surveillance expenses and fixed amounts for medical cost containment expenses.
- Repeat steps 3 and 4 for each Coverage table.
- Review the set reserves to ensure that the reserves are represented in the correct Coverage tables.
As you set reserves, BriteCore calculates the subtotals for each table. BriteCore automatically populates the Total Incurred field of the Summary section with a sum of each Coverage table’s Reserve Subtotal.