Ceded Case Reserves
Ceded case reserves are recorded by an Insurance Company for claims ceded to a Reinsurer pursuant to a reinsurance agreement. First, an Insurance Company records gross case reserves for the estimate of losses and loss adjustment expenses estimated to be paid on incurred claims. Second, the Insurance Company records an estimate to be recovered from the Reinsurer for the portion of coverage ceded. When the Insurance Company adjusts gross case reserves for a change in estimate, the Insurance Company also adjusts the ceded case reserves estimated to be recovered. When the Insurance Company pays claims, it bills the Reinsurer for it’s portion by recording a recoverable on paid losses and loss adjustment expenses. When claims are closed, any remaining case reserves and ceded case reserves are reduced to zero.
This OnDemand Learning session includes examples for recording ceded case reserves in an Insurance Company’s financial statements.
