IBNR

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Incurred But Not Reported(IBNR) –
Assumed: An estimate of the amount of an insurer’s (or self-insurer’s) liability for claim-generating events that have taken place but have not yet been reported to the insurer or self – insurer. The sum of IBNR losses plus incurred losses provides an estimate of the insurer’s eventual liabilities for losses during a given period.

EXAMPLES:

IBNR: An insurance company estimates that they will receive claims for $50,000
related to a policy during the next year. However, they believe that some claims may
not be reported (IBNR) reserves to cover those claims.

IBNR recovered (ceded): The insurance in the previous example reinsures the policy
with another company, and the reinsurer agrees to cover $5,000 of the IBNR
reserves.


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