Which of the following statements about incurred losses is correct?

Incurred losses refer to the total amount of losses that an insurance company expects to pay for claims, both those that have already been reported and those that are estimated but not yet reported, which is referred to as losses with reserves. This concept encompasses all losses that have occurred during a particular period, regardless of whether they have been settled or are still pending.

When analyzing incurred losses, it is essential to consider both the losses that have been paid (referred to as reported losses) and those that are anticipated but not yet settled (reflected in loss reserves). This comprehensive view allows insurers to gauge their overall liability and manage their financial resources more effectively.

The other options do not accurately reflect the definition or scope of incurred losses. For instance, premiums based solely on predicted losses are not directly related to incurred losses, since premiums are calculated based on risk assessment and expected future claims rather than past losses. Furthermore, while self-insurance is a method for managing risk, it does not define incurred losses; rather, it can be a way for entities to handle their own potential losses without transferring the risk to an insurer. Lastly, while claims must be made for losses to be considered incurred, incurred losses are determined based on a broader perspective rather than merely