Which term describes the reserve for claims that have occurred but not yet been reported (IBNR)?

Which term describes the reserve for claims that have occurred but not yet been reported (IBNR)?

• A. Incurred But Not Reported
• B. Contractual liability
• C. IBNR (Incurred But Not Reported)
• D. Mediation

Answer: (C)

The idea being tested is the reserve for claims that have already occurred but haven’t been reported yet. The standard label for this in practice is IBNR, which stands for Incurred But Not Reported. This term captures the lag between when claims happen and when they come into the insurer’s system, so reserves are set aside to cover those unseen claims once they’re reported. The other options don’t describe this concept: contractual liability refers to obligations arising from contracts, and mediation is a dispute-resolution process. While the phrase “Incurred But Not Reported” conveys the same idea, the conventional, recognized term is IBNR.

The idea being tested is the reserve for claims that have already occurred but haven’t been reported yet. The standard label for this in practice is IBNR, which stands for Incurred But Not Reported. This term captures the lag between when claims happen and when they come into the insurer’s system, so reserves are set aside to cover those unseen claims once they’re reported. The other options don’t describe this concept: contractual liability refers to obligations arising from contracts, and mediation is a dispute-resolution process. While the phrase “Incurred But Not Reported” conveys the same idea, the conventional, recognized term is IBNR.