YOU ASK:

What is the definition of Incurred But Not Reported Losses (IBNR)?

WE ANSWER:

Incurred But Not Reported Losses refer to the losses that happened during the coverage period but was only reported or filed to the insurer or reinsurer years after the policy is sold.

Called IBNR for short, this has a strong impact on the profitability statements of the insurance company and the reinsurer. The insurance company might consider an account or a line profitable when in reality; there are claims to be made against the policy. This lack of information will affect the way premiums are computed, as there may be actual claims, or again, there may really be no claims at all.

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