Incurred but not Reported (IBNR) Claim

A Incurred but not Reported (IBNR) Claim is a legal claim of covered losses incurred but have not yet been reported to the insurance company .

• Example(s):
  • …
• Counter-Example(s)
  • Reported but not Settled.
• See: Actuarial science, Insurance, Credibility Theory, Average Severity, Actuary, Losses Incurred, Expected Loss Ratio.

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References

2016

• (Wikipedia, 2016) ⇒ http://en.wikipedia.org/wiki/Incurred_but_not_reported
  • In insurance, incurred but not reported (IBNR) claims is the amount owed by an insurer to all valid claimants who have had a covered loss but have not yet reported it. Since the insurer knows neither how many of these losses have occurred, nor the severity of each loss, IBNR is necessarily an estimate. The sum of IBNR losses plus reported losses yields an estimate of the total eventual liabilities the insurer will cover, known as ultimate losses.

(...) The term "IBNR" is sometimes ambiguous, as it is not always clear whether it includes development on reported claims.

Pure IBNR refers to only unreported claims, not any development on reported claims.

Incurred but not enough reported (IBNER), in contrast, refers to development on reported claims. For example, when a claim is first reported, a $100 payment might be made, and a $900 case reserve might be established, for a total initial reported amount of $1000. However, the claim may later settle for a larger amount, resulting in 2000 of payments from the insurer to the claimant before the claim is closed. The estimated amount of this future development on reported claims is known as IBNER.

In some cases, the term "IBNR" refers only to pure IBNR; in other case, it is understood to be the sum of pure IBNR and IBNER.

2016

• (Investopedia,2016) ⇒ http://www.investopedia.com/terms/i/incurredbutnotreported.asp
  • QUOTE: A type of account frequently used in the insurance industry to refer to reserves that are established for claims and/or events that have transpired, but have not yet been reported to an insurance company. In these instances, an actuary will estimate the potential damages to a region; the insurance company may decide to set up reserves to allocate funds to those expected losses. To an actuary, these types of events and losses are said to have been incurred, but not reported.

2008

• (MA DoR, 2008) ⇒ Massachussets DoR. (2008). “Municipal Finance Glossary.” Massachussets Department of Revenue - Division of Local Services
  • QUOTE: Incurred But Not Reported (IBNR) – Per Ch. 61 of the Acts of 2005, any political subdivision that self-insures its group health plan under G.L. Ch. 32B §3A must conduct an annual audit of its health insurance claims fund to ensure that all claims incurred but not reported are properly accrued at the end of the fiscal year. Any year-end deficit must be funded in the succeeding year. Any political subdivision that has a deficit in its self-insurance health fund at the end of FY2005 because it has not been accruing these IBNR claims is allowed a one-time opportunity to amortize that deficit over a period not to exceed three years, beginning in FY2007. (See IGR No. 05-101)

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