11.3.4 Reserves
Just as life insurers do, health insurers must set aside a reserve (or treasury) to make sure there are enough funds to pay projected claims. Reserves represent the insurer's liability for losses for which settlement is not yet complete. Part of each premium payment goes toward the reserve fund.
Premium reserve funds represent the insurer's liability for losses that have not occurred but for which premiums have been paid.
Loss reserve funds represent the insurer's liability for losses that have occurred but for which settlement is not yet complete.
