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Foundations of Casualty Actuarial Science

of liability if it possesses three essential characteristics:
(i) The obligation involves a probable future sacrifice

of resources at a specified or determinable date.
(ii) The firm has little or no discretion to avoid the

transfer, and
(iii) The transaction or event giving rise to the obligation

has already occurred.

A claim liability of a property and casualty insurance
satisfies the second and third characteristics. The first
point is generally not satisfied in property and casualty ,
neither in any third party liability situation, however, the
third party claim situation it is not possible to give the
exact dare.

A loss reserve is a contingent liability in the sense that
each specific claim under adjustment depends on some
future contingent event to determine the extent of the
insurer's liability .

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