The amount a handler books as a liability for an identified claim, the first building block of reserving and the first source of its drift.
The case reserve is the estimate a claims handler books, file by open file, of the cost still to be paid. It is the elementary unit of non-life reserving, and the actuary then only adds what it cannot contain: claims incurred but not yet reported, and the foreseeable shortfall in existing estimates. Its quality rests on human judgment exercised early, often on an incomplete file, and it suffers from documented biases: handler optimism on files they hope to close, excess caution on files in the press, and above all inertia, since an open reserve is rarely revised upward until something forces it. This is why long tail lines cannot be reserved case by case alone, and why reserve review is carried out on aggregated triangles rather than on the sum of the files. The problem solved is putting a figure on a debt whose exact amount will only be known years from now.
The case reserves set in the 1970s on asbestos claims were revised upward repeatedly, none having anticipated the scale of the drift. Lloyd's had to create the Equitas vehicle in 1996 to carry roughly 14.7 billion pounds of pre-1993 liabilities, of which asbestos formed the main part, and save the market from the collapse of its names.
provision dossier-dossier, évaluation gestionnaire