• Congratulations to the Feedback Prize Draw winner for the September 2025 sitting. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • For every marked assignment, mock or tutorial for which you submit feedback, we will enter your name into the prize draw giving you the opportunity to win £150 of gift vouchers.

Chapter 18: Pricing - Deduction of RBNS/IBNR (page 11)

C

Carmen

Active Member
Hello,

I still don't quite understand how the previous year's RBNS/IBNR would end up being double counted if we don't deduct it from our calculations. I am understanding that if there is a portion of the previous year's RBNS/IBNR that has yet been settled, then this is reflected in the current year's RBNS/IBNR. Where does the risk of double counting be reflected?

Appreciate any clarification on this.

Thanks!
 
Hi Carmen,

The burning cost for this year should include the cost of claims that occurred this year. We do not want to include claims that occurred in previous years.

Claims that occurred in previous years will include those that were IBNR or RBNS at the end of last year, and so we don't want to include them in the burning cost for this year.

What was IBNR or RBNS last year will now either:
- have been paid, so will be included in this year's claims paid figure
- have been reported (if it hadn't already), so will be included in this year's IBNR figure
- still be not reported, so will be included in this year's IBNR figure.

But as we don't want them to be included in the burning cost for this year (ie claims that occurred in previous years), we need to remove them, hence we deduct last year's IBNR and RBNS.

I hope this helps,

Anna
 
Hi Anna,

Thanks for the explanation! I'm clear on this concept. Just would like to confirm one minor thing on your explanation

What was IBNR or RBNS last year will now either:
- have been paid, so will be included in this year's claims paid figure
- have been reported (if it hadn't already), so will be included in this year's IBNR figure << do you mean to say RBNS, instead of IBNR?
- still be not reported, so will be included in this year's IBNR figure.
 
You must log in or register to reply here.
Back
Top