What does Pure IBNR refer to?

Pure IBNR, which stands for "Incurred But Not Reported," specifically refers to claims that have occurred but have not yet been reported to the insurance company. The concept is crucial in actuarial science and insurance reserving, as it enables insurers to estimate the future liabilities associated with events that have already happened but for which claim reports are still outstanding.

In this context, it is important to understand that while some claims may be known and either pending payment or already reported, Pure IBNR focuses solely on claims that have not been communicated to the insurer at all. This can result from delays in the reporting process due to various reasons, including the time it takes for claimants to notify insurers after an incident occurs.

Estimating Pure IBNR is fundamental for ensuring that an insurance company maintains adequate reserves to fulfill its obligations towards policyholders. By accurately accounting for Pure IBNR, insurers can better manage their financial health and regulatory requirements.