How is the sum of paid losses and case reserves described?

The sum of paid losses and case reserves is described as incurred losses. Incurred losses represent the total amount of losses that an insurance company recognizes during a specific period, which includes both the losses that have already been paid out (paid losses) and those that are recognized but not yet paid (case reserves). This concept is crucial in insurance operations as it helps determine the financial status of an insurer and ensures that enough funds are set aside to cover future claims.

Incurred losses are a key component in the overall assessment of a company’s liability and risk exposure, making it essential for accurate financial reporting and reserving practices. Understanding incurred losses allows insurance companies to maintain adequate reserves and manage their underwriting processes effectively.