Losses that are not filed with the insurer or reinsurer until Years after the policy is sold. Some liability claims may be filed long after the event that caused the injury to occur.
Asbestos-related diseases, for example, do not show up until decades after the exposure. IBNR also refers to estimates made about claims already reported but where the full extent of the injury is not yet known, such as a Workers Compensation claim where the degree to which work-related injuries prevents a worker from earning what he or she earned before the injury unfolds over time. Insurance companies regularly adjust reserves for such losses as new information becomes available.
The actuarial estimate of amounts required to pay ultimate net losses after netting out existing amounts on reported but unpaid claims. The IBNR estimate includes an allowance for potential changes in such existing amounts as well as additional amounts for claims that have already occurred but are yet to be reported.
Estimates as of the valuation date of future claim payments related to claims that have occurred but have not yet been reported to the company.