What does "IBNR" stand for in actuarial terms?

"IBNR" stands for "Incurred But Not Reported," which is a key term used in actuarial science and insurance. This concept refers to liabilities for which an insurance company recognizes that claims have occurred but have not yet been reported to the insurer. IBNR is crucial for accurately assessing the reserves that an insurance company needs to maintain in order to pay future claims.

This term is particularly important in the context of loss reserves, where actuaries use statistical methods to estimate the cost of claims that have already occurred but have not been reported by policyholders. By properly accounting for IBNR, insurers help ensure their financial stability and compliance with regulatory requirements. This allows them to set aside adequate funds to cover future claims, ultimately maintaining the integrity of the insurance system.

The other choices do not accurately reflect the concept of IBNR within the context of actuarial practices or insurance accounting. Thus, recognizing “Incurred But Not Reported” as the correct definition helps to understand a fundamental aspect of insurance liability management.