Claim reopening
Resumption of a claim considered closed, following a deterioration, a new claim or a recovery, which distorts closure statistics and feeds late reserve development.
A closed claim is not always finished. It can be reopened when a victim's condition worsens after consolidation, when a third party makes a new claim linked to the same event, when hidden damage appears after repair, or when a recovery succeeds and brings money back in. In bodily injury, French law allows compensation for deterioration, even after a settlement, provided it is medically established. Reopening has specific technical consequences. It distorts closure time and rate indicators if not tracked separately. It feeds late development of costs, which loss triangles must capture, and a hasty closure policy, meant to make claim inventories look better, is paid for later through more reopenings. For the actuary, the reopening rate by line and age is basic data for reserving late claims, notably in liability and protection lines. For the handler, the quality of the settlement agreement, which states precisely what it settles, is the best way to avoid disputed reopenings.
Textbook case: an insurer finds that 4 percent of its closed motor bodily injury claims are reopened within five years, at an average additional cost equal to 60 percent of the initial settlement. Having failed to account for it, its reserves for the year were underestimated by about 2 percent of bodily injury costs.
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