What is the definition of "IBNR burn rate" please? What does it tell us about claims development? Thanks
This is the change in incurred over a time period, divided by the IBNR at the start of the period. So this is a measure of how much IBNR has been used up over the period. It is an example of a survival ratio. It tells us how long the IBNR will last if claims continue to develop at the same pace as previously. Hence, it helps us analyse reserve adequacy.
I thought that should be IBNR/Change in incurred just like OSCR/Claims paid? So reserve adequacy is measured by the inverse of the IBNR burn rate?
I'm not sure what you're referring to when you say "I thought that should be IBNR/Change in incurred". In any case I wouldn't over-complicate this if I were you. There is no one single ratio for analysing reserve adequacy, indeed it's quite normal to look at several ratios, and trends in ratios over time, in order to develop a complete picture.
