Why does the Fund accumulate reserves?
The Fund follows conventional insurance practice and quarantines all losses for a particular year against the contributions received for that year. Therefore, the Fund needs to set aside each year an amount to meet liabilities arising from claims made in that year (claims, particularly in the liability classes of insurance, sometimes take a number of years to settle). The level of reserves required to meet outstanding liabilities remains a matter for periodic actuarial estimation until they are actually settled.
