Case Incurred Development Method Definition & Meaning | Insurance Term | CSIMarket
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Glossary

Case Incurred Development Method

Insurance Term

1. Estimating the ultimate cost of a claim: This involves taking into consideration all costs associated with settling the claim, including medical expenses, lost wages, legal fees, and other expenses.

2. Allocating the estimated cost across time: This means estimating how much of the ultimate cost will be incurred in each year until the claim is fully settled.

3. Assigning a present value to each annual cost: This involves discounting each future cost to its present value using an appropriate discount rate. The sum of these present values is the present value of the estimated total cost of the claim.

The Case Incurred Development Method is commonly used by insurers to help them manage their financial exposure and to make informed decisions about pricing and reserving. By accurately estimating the ultimate cost of a claim, insurers can ensure that they have sufficient reserves to cover their liabilities and avoid financial losses.


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