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🔴 '''Large claim''' refers to an individual [[Definition:Insurance claim | insurance claim]] whose value significantly exceeds the average claim size for a given [[Definition:Line of business | line of business]] or portfolio, crossing a threshold that triggers special handling, reporting, or [[Definition:Reserving | reserving]] protocols within an [[Definition:Insurer | insurer's]] operations. The precise monetary boundary that separates a large claim from an attritional one varies widely — a property insurer might define it at $500,000, while a [[Definition:Professional liability insurance | professional liability]] book might set the bar at $1 million or more — and different companies and [[Definition:Reinsurance | reinsurance]] treaties define the term according to their own risk appetite and portfolio composition. Regardless of the specific threshold, large claims share a common characteristic: they carry outsized financial impact relative to the earned [[Definition:Premium | premium]] supporting them.

⚙️ When a claim breaches the large-claim threshold, it typically enters a dedicated [[Definition:Large claim management | management]] workflow. The insurer assigns senior [[Definition:Claims adjuster | adjusters]] or specialist teams, engages external [[Definition:Loss adjuster | loss adjusters]] or legal counsel, and places the file under heightened executive oversight. From an actuarial standpoint, large claims are often analyzed separately from the attritional layer because their frequency and severity follow different statistical distributions — [[Definition:Actuary | actuaries]] commonly model them using [[Definition:Extreme value theory | extreme value distributions]] or Pareto-type curves rather than the normal distributions adequate for smaller losses. [[Definition:Reinsurance | Reinsurance]] programs, particularly [[Definition:Excess of loss reinsurance | excess of loss]] treaties, are structured explicitly around the expected frequency and severity of large claims, making their accurate identification and reporting essential for both ceding companies and [[Definition:Reinsurer | reinsurers]].

📌 The strategic significance of large claims extends beyond individual case management. A handful of large losses in a given year can swing an insurer's [[Definition:Loss ratio | loss ratio]] from profitable to deeply unprofitable, which is why [[Definition:Underwriting | underwriters]] and portfolio managers invest heavily in understanding large-claim drivers and trends. Sectors like [[Definition:Marine insurance | marine]], [[Definition:Aviation insurance | aviation]], [[Definition:Construction insurance | construction]], and [[Definition:Directors and officers liability insurance (D&O) | D&O liability]] are inherently more susceptible to large-claim volatility. Across global markets, regulatory reporting frameworks — including those mandated by the [[Definition:National Association of Insurance Commissioners (NAIC) | NAIC]] in the United States and [[Definition:Prudential Regulation Authority (PRA) | PRA]] in the United Kingdom — require disclosure of individual large losses above certain thresholds, contributing to market-wide transparency and enabling better [[Definition:Benchmarking | benchmarking]] of large-claim experience.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Large claim management]]
* [[Definition:Excess of loss reinsurance]]
* [[Definition:Loss ratio]]
* [[Definition:Catastrophe loss]]
* [[Definition:Reserving]]
* [[Definition:Attritional loss]]
{{Div col end}}

Definition:Large claim - Revision history

PlumBot: Bot: Creating new article from JSON