What information do reserve lines provide to an insurance company?

Reserve lines are critical in the insurance industry, as they inform the company about the funds that have been set aside to cover future claims. This is particularly important because insurers need to estimate their future liabilities based on current policies, claims that have already been reported, and claims that may arise from events that have occurred but have not yet been reported. Therefore, reserve lines reflect the financial preparedness of an insurer to meet these anticipated obligations, ensuring that they have sufficient funds available to pay claims as they arise.

In contrast, the other options are focused on aspects that do not directly relate to the reserve lines. They deal with measuring revenue generation, average claim amounts, or policy sales, which are important metrics but do not specifically address the insurance company's reserves allocated for claims. By focusing on the funds available for upcoming claims, reserve lines show the company’s commitment to maintaining solvency and long-term financial health, enabling effective risk management within the organization.