IBNR claims (Incurred But Not Reported)

IBNR (incurred but not reported) is the part of an accident year's ultimate cost that does not yet sit in any claim file. The formula fits on one line: IBNR = estimated ultimate − (paid + case reserves). The ultimate comes from chain ladder, Bornhuetter-Ferguson or a related method, and IBNR reserving runs just as well in a spreadsheet as in the R package ChainLadder; no software picks the development factors for you. Strictly, pure IBNR covers only claims that have occurred but have not been reported. In common market usage it also picks up the deficiency in case reserves on open claims, sometimes broken out as IBNER (incurred but not enough reported). IBNR is never observed, only estimated, and an understatement flatters the year's result until late reports bring it back as adverse development. In reinsurance the late share is larger still, because a loss has to go through the cedant before it reaches the reinsurer. In cyber, the lag between intrusion, discovery and notification makes the IBNR share of recent years especially heavy, and the ULAE reserve moves in proportion to it.