What is the primary purpose of insurance reserves?

The primary purpose of insurance reserves is to ensure sufficient funds for future claims. Insurance reserves are the funds that insurers set aside to cover anticipated future policyholder claims and benefits. These reserves are crucial for an insurance company's financial stability and help ensure that it can meet its obligations to policyholders over time.

By accurately estimating the amount needed for future claims—based on factors such as historical claims data, policy terms, and expected future liabilities—insurers can maintain a viable business model that protects both the company and its clients. This practice aligns with the regulatory requirements that insurance companies must adhere to, ensuring that they remain solvent and capable of fulfilling their insurance contracts.

The other options do not reflect the fundamental role of insurance reserves. While immediate cash for operational expenses is necessary for running a business, it isn't the focus of reserves. Investing in the stock market can be a strategy for generating additional income, but it is not the purpose of reserves. Similarly, enhancing customer loyalty is important for business success, but it does not directly relate to how reserves function in the context of insurance.