Ausfallreserven
Ausfallreserven, also known as loss reserves or default reserves, are the funds set aside by insurers, banks, or other financial institutions to cover the costs of future claims or losses that have already been incurred but not yet fully paid. They represent an estimate of the ultimate liability associated with a portfolio of policies, loans, or other contractual obligations.
The primary purpose of Ausfallreserven is to ensure that an institution has sufficient liquidity to meet its
Regulatory frameworks in many jurisdictions, such as Solvency II in the European Union or the risk-based capital
If reserves are underestimated, an insurer may face solvency issues when claims materialize, whereas overestimation can