IBNR, incurred but not reported, is the estimate of losses that have occurred but have not yet been reported to the insurer, held as part of reserves. It exists because injuries and claims are often reported long after the event.
Between an incident and a claim there can be a long lag, especially where injuries emerge slowly or claimants take time to bring suit. The insurer must still recognize the cost of losses already incurred.
IBNR is estimated from historical reporting patterns, using actuarial methods that project how many claims will still arrive and what they will cost. Legal developments such as changes in limitation periods or the emergence of a mass tort can shift those patterns quickly.
IBNR is not a reserve for claims the insurer knows about. Those are case reserves. IBNR covers what has not yet come in.
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