In the example involving a 2004 injury, what is the reserve percentage assigned to that injury?

• A. 25%
• B. 0%
• C. 50%
• D. 100%

Answer: (A)

Reserves are estimates of what an insurer will eventually pay for an open claim, and for a self-insured plan each injury is given a share of the total reserve to reflect its portion of the expected cost. The percentage assigned to a specific injury shows how much of the total reserve is attributed to that injury at the current stage of development.

In the example, the 2004 injury is allocated 25% of the total reserve. This means a quarter of the pool’s reserve is tied to that injury, reflecting its development status and expected ultimate cost relative to other claims. It isn’t set at full value (100%) because the claim isn’t fully mature, and it’s not zero because there is an outstanding obligation requiring funds.

The other percentages would imply different levels of outstanding liability for that injury, which the example does not support.