What must be documented when managing claims reserves?

When managing claims reserves, periodic reassessment and management review are essential components that ensure reserves are accurate and reflective of current circumstances. This process involves regularly evaluating the claims situation, considering new information, and adjusting the reserves as needed to align with the expected payouts for those claims.

Documentation of periodic reassessment serves various purposes, including compliance with regulatory requirements, enhancing financial reporting accuracy, and ensuring proper allocation of resources. Regular review allows for adjustments based on changes in claims status, settlement negotiations, or the outcome of litigation, which can significantly affect reserve levels.

The practice of managing reserves without systematic documentation could lead to financial misstatements, inadequate funding for future payouts, and potential legal issues. Therefore, maintaining thorough documentation of the reserve management process is crucial for financial integrity and operational effectiveness in claims management.