Loss development is the change in the estimated cost of claims as they mature, usually shown as a triangle comparing estimates at successive dates for each period in which the losses occurred. It shows how reserves have moved toward their final amounts.
Early estimates of a claim's cost are rarely final. As litigation proceeds, facts emerge, motions are decided and settlement values become clearer, and the estimate moves. Development patterns summarize how that movement has behaved historically.
A pattern is useful only if it applies to the claims in question. Mixing claim types, venues or periods with different procedures can produce a pattern that fits none of them.
Loss development is not a forecast by itself. It is a record that supports a forecast, and it needs the same cohort and cutoff discipline as any other estimate.
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