What do insurance companies call the amount they expect to pay out in claims?

Insurance companies refer to the amount they expect to pay out in claims as a claims reserve. This reserve is a crucial part of an insurer's financial management, serving as a liability that ensures there are sufficient funds set aside to cover future claims. The claims reserve is determined based on estimates of the costs associated with claims that have been reported but not yet settled and those that are expected to be reported in the future.

The claims reserve is important because it helps insurers maintain solvency and financial stability, allowing them to meet their obligations to policyholders without financial strain. It is a proactive measure that reflects the company's anticipated financial commitment in relation to its underwriting activities.

The other terms mentioned, such as loss ratio, claim reserve analysis, and underwriting profit, do not specifically refer to the amount set aside for expected claims payouts. The loss ratio represents the ratio of claims paid to premiums earned, while claim reserve analysis involves assessing the adequacy and accuracy of reserves. Underwriting profit refers to the profit made from underwriting insurance policies after accounting for claims and administrative expenses, but it does not directly relate to the reserves required for future claims payouts.