IBNR claims (Incurred But Not Reported)

IBNR claims, standing for Incurred But Not Reported, are claims that have already occurred at the reporting date but have not yet been reported to the insurer, or whose final cost is not yet known. Since the insurer cannot wait for every claim to be reported before estimating its burden, it sets up an IBNR reserve using statistical methods, the most classic of which is the Chain Ladder method applied to development triangles. This reserve is a cornerstone of the accounts' fairness, because underestimating IBNR artificially flatters a year's result before reality reasserts itself in subsequent years. The materiality of IBNR varies greatly by line of business, marginal on short-tail risks such as motor damage, it becomes considerable on long-tail lines such as liability or asbestos, where claims may be reported years after the triggering event. In cyber insurance, estimating IBNR is particularly delicate, because the lag between the initial intrusion, its discovery and the reporting of the loss can be long and irregular.

Closing its accounts on 31 December 2024, a cyber insurer knows from experience that several intrusions occurring in November and December have not yet been detected by insureds, whose median discovery lag exceeds three months. It sets up an IBNR reserve of 12 million euros, computed via the Chain Ladder method applied to its development triangles. In March 2025, two late notifications totaling 9 million confirm the estimate was reasonable.

IBNR, sinistres survenus non déclarés, tardifs