Some claims have already been settled and the checks mailed. Paid loss is the total amount an insurer has actually disbursed in claim payments during a period, including partial payments on open claims. It does not include reserves for future payments.

Paid losses are a cash measure and are relatively objective. They lag the occurrence of claims, especially in long-tail lines where settlements take years. Comparing paid losses with incurred losses reveals how reserves are developing. Rapid increases in paid losses may signal emerging severity trends.

Cash-flow planning depends on reliable projections of paid-loss patterns. Reinsurance recoveries are often stated on a paid basis as well. While paid losses alone do not measure underwriting performance, they are essential for liquidity management and for reconciling the claims ledger to the bank.

• Claim amounts actually disbursed by the insurer
• Cash-based measure excluding reserves
• Lags occurrence in long-tail lines
• Important for cash-flow and reinsurance accounting