When an insurer sells a policy, it knows the premium exactly but not the claims. Some accidents happen, get reported, and get paid quickly; others are reported late, and some, like an injury whose severity only emerges over years, take a decade to settle. The liability for all of these is the technical provision (or loss reserve), and on a general insurer it is usually the largest single item on the balance sheet. Mis-state it and the entire reported profit is fiction.