If claims have been reported to the insurer after the contract period, it may several months for the insurer to investigate and establish a case…

The statement is correct. Establishing a case reserve is a critical step in the claims handling process that follows the reporting of a claim. For many types of claims, especially in liability lines, the insurer must conduct a thorough investigation to determine the facts of the loss, verify that the claim is covered under the policy, and estimate the potential financial payout. This investigation can be complex, often requiring expert opinions, witness interviews, and legal analysis. This necessary due diligence means the process of setting an accurate case reserve can easily extend over several weeks or months, particularly for claims with delayed reporting or intricate circumstances.

B. False: This option is incorrect because it fails to recognize the procedural and analytical complexities involved in claims investigation and evaluation. The assumption that a case reserve can always be established quickly is not reflective of industry practice for non-trivial claims.

1. Friedland

J. (2022). Fundamentals of General Insurance Actuarial Analysis. Casualty Actuarial Society. In Chapter 4

"The Claim Process

" Section 4.3

"Claim Adjustment

" the text details the investigative duties of a claims adjuster. These duties include determining the cause of loss

the extent of damages

and potential liability. The description of this multi-faceted process supports the conclusion that it is often time-consuming

making a multi-month timeframe for establishing a reserve plausible for complex cases.

2. Rejda

G. E.

& McNamara

M. J. (2017). Principles of Risk Management and Insurance (13th ed.). Pearson. Chapter 19

"Insurance Company Operations

" outlines the major steps in claim settlement

which include notice of loss

investigation of the claim

filing a proof of loss

and a decision concerning payment. The investigation phase is described as a detailed process of verifying coverage and assessing the loss amount

which inherently takes time. This text is standard courseware in numerous university risk management programs.

3. University of Illinois Urbana-Champaign. (2023). FIN 412: Risk Management and Insurance Course Syllabus. The syllabus lists Rejda & McNamara's Principles of Risk Management and Insurance as the primary textbook

confirming its status as approved university courseware. The topics covered include insurance company operations and the claims process

reinforcing the academic basis for understanding the timeline of claims handling.