Litigation Strategy and Case Evaluation
Exposure and Valuation
Development occurs as new information about liability, damages, or coverage emerges. Adverse development requires reserve strengthening and affects financial reporting and reinsurance recoveries.
Systematic adverse development indicates estimation problems.
Alternative Names:
Reserve Development|Adverse Reserve Development
Why it Matters?
Individual claim development is expected, but systematic adverse development across a book indicates the reserving methodology is inadequate rather than that particular claims surprised, which is a diagnostic distinction that changes the response. Late-emerging development on older claims is particularly problematic because reinsurance and financial reporting assumed earlier estimates. Identifying development drivers by claim characteristic supports methodology correction.
Frequently Confused with
Related terms
Frequently asked questions
What distinguishes systematic from individual development?
Why is late development problematic?
