Incurred But Not Reported (IBNR)

AAA

DEFINITION of 'Incurred But Not Reported (IBNR)'

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.

INVESTOPEDIA EXPLAINS 'Incurred But Not Reported (IBNR)'

This term is frequently used by insurance companies, particularly along the East and Gulf Coasts of the United States, where hurricanes are common. After a storm hits, actuaries estimate the potential damage to infrastructure and the claims that may be anticipated. Based on this analysis, money is then set aside (in a reserve) to pay for claims. Again, in this example the actual losses have been incurred, but have not officially been reported.

RELATED TERMS
  1. Catastrophe Bond - CAT

    A high-yield debt instrument that is usually insurance linked ...
  2. Reinsurance

    The practice of insurers transferring portions of risk portfolios ...
  3. Actuarial Risk

    The risk that the assumptions that actuaries implement into a ...
  4. Actuary

    A professional statistician working for an insurance company. ...
  5. Insurance

    A contract (policy) in which an individual or entity receives ...
  6. Actuarial Gain Or Loss

    Gain or loss arising from the difference between estimates and ...
RELATED FAQS
  1. What kinds of costs are included in Free on Board (FOB) shipping?

    Free on board (FOB) shipping is a trade term published by the International Chamber of Commerce or ICC, that indicates which ... Read Full Answer >>
  2. What do insurance companies qualify as hazardous activity?

    An insurance company defines a hazardous activity essentially as any type of undertaking with a high level of risk of injury ... Read Full Answer >>
  3. What financial ratios are most useful for an investor to evaluate the liquidity of ...

    An insurance company, like any other nonfinancial company, needs access to liquidity in case it needs to fulfill its debt ... Read Full Answer >>
  4. What economic indicators are important to monitor when investing in the insurance ...

    Inflation and interest rates are the best economic indicators to monitor when investing in the insurance sector. Unlike with ... Read Full Answer >>
  5. Why do some companies in the insurance sector engage in reinsurance?

    Some companies in the insurance sector engage in reinsurance because they want to reduce risk. Reinsurance is basically insurance ... Read Full Answer >>
  6. Why is the insurance sector considered a low-risk investment?

    Historically, the insurance sector has enjoyed modest returns and perceived safety. It's been a favorite for investors who ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Introduction To Weather Derivatives

    Learn about a financial instrument that makes temperature a tradable commodity.
  2. Retirement

    Tax Relief For Katrina Victims

    Find out if you qualify for the assistance offered to hurricane survivors by the U.S. government.
  3. Insurance

    Do You Need Kidnap & Ransom Insurance?

    Americans working abroad – and high-profile individuals traveling frequently in kidnapping hot spots – should consider this type of protection.
  4. Insurance

    A Guide To Kidnap & Ransom Insurance

    Every year, thousands of people are kidnapped for ransom all over the world. This insurance offers protection – and peace of mind.
  5. Insurance

    Should I Insure My Wedding Ring?

    It depends, in part, on the ring's value and your current insurance coverage. Here's a guide to making a decision that's right for you.
  6. Insurance

    How To Insure Your Wedding Ring

    Read on for everything you need to know to make sure this precious possession is covered against theft, damage, loss and more.
  7. Professionals

    How Advisors Can Help When a Service Member Dies

    Finances are probably last thing that survivors of our nation’s deceased service members want to deal with. Here's what advisors can do to help.
  8. Investing Basics

    Are Annuities Right for You?

    Annuities are safe and often appealing, but IRAs and 401(k)s offer advantages that annuities typically can’t match, with little additional risk.
  9. Insurance

    Should You Insure Your Wedding Dress?

    It can be money well spent that ensures your gown is ready for your big day. Plus, insurance covers a groom's and other attendants' clothing.
  10. Insurance

    3 Reasons To Get Umbrella Insurance

    A relatively small annual premium can buy you a lot of peace of mind. In today's litigious society, that's money well spent.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!