What indicates a loss reserve's adequacy?

A loss reserve's adequacy is primarily indicated by the amount of reported claims that are yet to be settled. This figure is crucial because it reflects the insurer's responsibility to pay for claims that have already been acknowledged but are still in the process of being resolved. Evaluating this amount helps determine whether the reserves set aside by the insurer are sufficient to cover the pending claims.

In assessing loss reserves, insurers consider various factors, including the historical data of claims, the nature of the claims involved, and the time it generally takes to settle similar claims. An adequately funded loss reserve ensures that an insurer can meet its obligations when these claims are settled, thereby maintaining the financial health of the organization and ensuring that policyholders can rely on their coverage.

The other options do not directly relate to the adequacy of loss reserves. Consumer satisfaction speaks to the quality of service provided by the insurer, which is important but not a direct measure of loss reserve adequacy. The marketing budget reflects the funds allocated for promotional activities, and the number of staff managing claims indicates operational capacity but does not provide insight into whether the reserves are suitable for the financial obligations of reported claims.