Large loss reports are typically prepared when reserves exceed a specified threshold.

• A. Before any payment is made.
• B. Only for property losses.
• C. When reserves exceed threshold.
• D. When policy expires.

Answer: (C)

The point of this item is the trigger for when a claim becomes a “large loss” in reporting terms. A large loss report is prepared when the claim’s reserved exposure exceeds a predefined threshold. That reserve level signals to management and relevant teams that the claim is high‑severity and requires closer monitoring, potential escalation, and coordination with underwriting, reinsurance, and risk management. The trigger is about the reserve amount, not the timing of payments, not limited to property losses, and not tied to policy expiration. Thresholds are set by the insurer and can vary, but the important idea is that crossing that reserve threshold prompts formal large loss reporting.