Which internal report is required when claim reserves exceed a specified threshold?

• A. Large loss
• B. Interim
• C. Preliminary
• D. Captioned

Answer: (A)

When a claim’s reserves reach a material, predefined threshold, the internal process calls for a large loss report. This report is designed to flag high-severity claims and bring them to management’s attention with focused detail. It typically consolidates essential information such as the claim identifier, insured, policy, current reserve, the estimated ultimate loss, cause or exposure, status of investigation, potential development risk, and recommended actions. The purpose is to enable timely oversight, reserve adjustments, and proper allocation of resources for monitoring and managing the financial impact.

Other report types exist for different purposes. Interim or ongoing updates track changes across many claims and are used to monitor reserve movements over time. A preliminary report usually refers to an initial estimate before full information is gathered. Captioned is not a standard term for this purpose. The large loss report is specifically the tool used to escalate and document the potential material impact of individual high-severity claims.