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Incurred but not enough reported

The reserve for the expected shortfall on claims already open and estimated. It is separate from the reserve for claims nobody knows about yet.

Definition

Severe head injury in a road accident: medical consolidation commonly takes three to five years, and the Dintilhac nomenclature of July 2005 requires some twenty heads of damage to be valued, including third-party care capitalized over life expectancy. So the reserve set up in year one almost always falls well short of the final cost. IBNER (incurred but not enough reported) covers that shortfall on known, open files that already carry a reserve. IBNR covers something else: claims incurred but not yet reported. The two move at different speeds and for different reasons. IBNR runs off as soon as notice comes in. IBNER builds over the whole life of the file, fed by medical inflation, case law and the consolidation date. In bodily injury lines it is the larger part of the actuarial uplift.

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Incurred but not enough reported: Claims & settlement glossary illustration, AlgoPolis
Example

In a motor claim with a severe head injury, medical consolidation commonly takes three to five years. The Dintilhac schedule, published in July 2005, requires some twenty separate heads of damage to be assessed, including third-party care, which is capitalized over life expectancy. The reserve opened in the first year is therefore, almost by construction, far below the eventual cost.

Read next
Claims & settlementCase reserveThe amount a handler books as a liability for an identified claim. It is the first building block of reserving and the first source of its drift.Read the entry →Claims & settlementDintilhac schedule of heads of damageThe French classification of heads of bodily injury damage, never made binding by any statute yet applied by every court.Read the entry →Claims & settlementClaims payment patternThe distribution over time of payments on a claims cohort, which drives the discounting of reserves and the duration of the risk carried.Read the entry →
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