- A reserve kept by insurance companies, and required by law, that is used to act as a contingency in case the insurer's investments are overvalued or if a liability turns out to be larger than expected.
stockpile, set-aside, overcompensate, buffer
Related Terms and Acronyms
- Bank Reserves — Definition,
- Banks' holdings of deposits.
- Legal Reserve — Definition,
- The legally mandated minimum amount of money an insurer must keep liquid in order to satisfy its obligations to policyholders.
- Loss Reserve — Definition,
- A reserve of money and liquid assets set aside by an insurer for the payment of claims that have been submitted but have yet to be paid out.
- Total Admitted Assets — Definition,
- What assets an insurance company is legally allowed to include when determining its financial solvency.
- Voluntary Reserve — Definition,
- A reserve kept by an insurer for future claims that is larger than is required by government regulations.