A Method Proposed for the Calculation of Liability and Workmen's Compensation Claim Reserves

The various methods used or proposed in the past for the calculation of Liability and Workmen's Compensation Claim Reserves have fallen under one of the two general headings mentioned below or have been a combination of these two methods: (1) An estimate of the probable cost of outstanding claims---either by means of average claim costs based upon previous experience or by individual estimate. (2) A reserve of that part of the expected loss payments which has not been paid out up to date of valuation; that is, the excess of a certain percentage of earned premiums over losses and loss expenses paid prior to date of valuation.