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Loss Reserve Development Calculator

Work out loss reserve development instantly with clear inputs, formula shown and shareable results.

About Loss Reserve Development Calculator

Claims take years to settle, so reported figures understate the final cost. A loss development factor from historical triangles scales reported losses up to ultimate; the gap above reported is the IBNR provision for claims not yet fully known.

Formula

Chain ladder

Ultimate = Reported × LDF; IBNR = Ultimate - Reported; Reserve = Ultimate - Paid

Worked example

With the default values below, Loss Reserve Development Calculator returns Estimated Ultimate Loss of $5,670,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Reported Incurred Lossesminimum 0
4,200,000
Paid To Dateminimum 0
2,800,000
Loss Development Factoraccepts 1–10
1.35

Results

Estimated Ultimate Loss
$5,670,000.00
IBNR Provision
$1,470,000.00
Case Reserves Outstanding
$1,400,000.00
Total Reserve Required
$2,870,000.00

Step by step

  1. 1Values used
  2. 2Chain ladder
  3. 3Estimated Ultimate Loss= 5,670,000.00
  4. 4IBNR Provision= 1,470,000.00
  5. 5Case Reserves Outstanding= 1,400,000.00
  6. 6Total Reserve Required= 2,870,000.00

Assumptions and limits

  • The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What is the difference between case reserves and IBNR?

Case reserves are the adjuster's estimate on known claims. IBNR covers claims incurred but not yet reported, plus future development on known ones.

Where does the LDF come from?

From age-to-age ratios in a development triangle of the insurer's own history, blended with industry benchmarks for thin data.

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