What does IBNR stand for?

What does IBNR stand for?

• A. Incurred But Not Reported
• B. Incurred By Not Reconciled
• C. Incurred By Not Reported
• D. Instant Benefit Not Reimbursed

Answer: (A)

When valuing insurance liabilities, you have to account for claims that have already happened but haven’t been reported yet. That unseen portion needs to be reserved for, so the insurer isn’t caught short later. This idea is captured by a term that literally means the losses are incurred but not yet reported. It stands for Incurred But Not Reported, describing the situation exactly: the event has occurred and cost is recognized, but a claim hasn’t been filed or recorded yet. The other phrasings aren’t standard terms in this context and don’t describe the lag between occurrence and reporting.

When valuing insurance liabilities, you have to account for claims that have already happened but haven’t been reported yet. That unseen portion needs to be reserved for, so the insurer isn’t caught short later. This idea is captured by a term that literally means the losses are incurred but not yet reported. It stands for Incurred But Not Reported, describing the situation exactly: the event has occurred and cost is recognized, but a claim hasn’t been filed or recorded yet. The other phrasings aren’t standard terms in this context and don’t describe the lag between occurrence and reporting.