Chapter 1, part 3.2: IBNER - settlement or reporting delay?

Discussion in 'SP7' started by zuglubuglu, Dec 18, 2014.

  1. zuglubuglu

    zuglubuglu Member

    In section 3.2, we discuss the five components of outstanding claims reserves, one of them being Incurred But Not Enough Reported (IBNER). IBNER is then reported to be possible due to a reporting delay as well as settlement delay in question 1.3

    If that is the case, shouldn't we be altering the definition of a reporting delay to "the time from when the event occurs through to the time that the insruance company is fully notified of the details regarding the event"?
     
    Last edited by a moderator: Dec 18, 2014
    zuglubuglu, Dec 18, 2014
    #1
  2. Darren Michaels

    Darren Michaels ActEd Tutor Staff Member

    Hi there

    In practice there is sometimes some flexibility between whether a reserve is part of the IBNER or part of the IBNR (sometimes called pure IBNR).

    This is particularly the case when a claim can involve more than one part (head of damage) and not all parts are known when the claim is first reported. For example a car accident where initially the vehicle damage component is reported and it later transpires that there is a bodily injury (BI) component as well. In theory the BI component could be part of either the IBNER or the IBNR reserve and different insurers may treat this differently.

    If it is considered part of the IBNER then this is a situation where the IBNER can be linked to a reporting delay.

    Reporting delay is the time between when the claim event happens and when it is reported to the insurer.
     
    Darren Michaels, Dec 22, 2014
    #2
  3. zuglubuglu

    zuglubuglu Member

    Hi Darren,

    Thank you for your reply. Therefore different companies may have alternative ways to deal with IBNER and in the case you mentioned, it could be treated as IBNER since the company was not aware of the BI component.

    Am I right in assuming that the "claim event" in such a case is the "Bodily Injury" rather than the actual "car accident" since the reporting delay is referring to the gap in the insurer knowing about the BI claim and the actual event?

    Regards,
    Dominic
     
    zuglubuglu, Dec 22, 2014
    #3
  4. Darren Michaels

    Darren Michaels ActEd Tutor Staff Member

    Hi Dominic

    In my example I think the claim event is the car accident as the bodily injury is deemed to occur at the same time. I would regard them as synonymous.

    The event delay is then the delay between when the accident happened and when the claimant was actually aware that he had an injury.

    The reporting delay then covers the time from when the claimant knows about the injury until he reports it to the insurer.

    Hope this helps.
     
    Darren Michaels, Dec 23, 2014
    #4
  5. zuglubuglu

    zuglubuglu Member

    Thank you

    Thakn you for your replies. This is now much clearer.
     
    zuglubuglu, Jan 9, 2015
    #5

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