Why might accident reports be delayed, impacting reserves?

Accident reports may experience delays for a variety of reasons, which directly impacts reserves set aside for claims. Delays can arise from several factors such as incomplete or inaccurate information at the time of the report, the need for further investigation to assess the full circumstances of the accident, or even external factors such as delays in obtaining medical records or law enforcement reports.

In this context, understanding that claims can remain outstanding is crucial for adjusters. When a report is delayed, it does not correlate with the quality or validity of the claim itself; instead, it may reflect the complexities involved in thoroughly assessing the situation. This has a direct effect on reserves because the insurance company must adjust the funds allocated to meet potential liabilities based on the status of these claims. Establishing adequate reserves relies heavily on timely and accurate accident reports, and when these are delayed, uncertainty increases regarding the financial impact of the claims being processed.