Incurred But Not Reported (IBNR)- 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 provide an estimate of the insurer’s eventual liabilities for losses during a given period.
I am not a proponent of IBNR as the estimates for IBNR always seem to be somewhat inaccurate. This is especially true for first dollar Workers Comp policies.
An actuary calculates IBNR in most cases. No standard estimation calculation exists in the actuarial world. Actuaries use very differing methods for IBNR calculations.
Self insured should view IBNR very carefully. If the figure seems excessive, the employer should contact the actuarial firm or the individual actuary that created the estimate. IBENR (Incurred But Not Enough Reported) brings overly small reserves set by adjusters, The acronym IBENR means the adjuster had not reserved the file high enough.
I do not agree with IBENR whatsoever as the reserving function by adjusters takes this situation into account. If one sees this term, they should heavily question the calculation.
IBENR differs greatly from IBNR – Incurred But Not Reported.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.