Paid Claims

Example

“The insurance company's annual report showed $2.3 billion in paid claims, reflecting their total payouts to policyholders during the year.”

Memory Tip

Think 'paid and done' - once claims are paid, they're completed transactions that show the insurer has fulfilled their promise.

Why It Matters

Tracking paid claims helps evaluate an insurance company's financial stability and claims-paying ability. For policyholders, understanding this metric indicates how reliably an insurer honors their commitments when claims occur.

Common Misconception

People often confuse paid claims with incurred claims, thinking they're the same thing. Incurred claims include both paid claims and reserves for claims that haven't been paid yet, making it a larger number that includes estimated future payments.

In Practice

ABC Insurance received 10,000 claims totaling $50 million in estimated damages this year. They have paid out $35 million in settled claims (paid claims) and are holding $12 million in reserves for pending claims, with $3 million in claims that were denied or withdrawn. The paid claims of $35 million represent 70% of their total incurred claims of $47 million ($35M paid + $12M reserved).

Etymology

A straightforward combination of 'paid' (past tense of pay) and 'claims,' used in insurance since the early days of the industry to distinguish settled claims from those still being processed.

Common Misspellings

Related Terms

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Other insurance terms you should know

See Also