The greater the size of the Incurred but not reported (IBNR) liabilities, the longer the:

Question

Options

• Acatastrophe procedure
• Btrack claims
• Cemergence pattern
• Dsettlement pattern

• A
  4% (1)
• B
  4% (1)
• C
  83% (20)
• D
  8% (2)

Explanation

IBNR liabilities represent claims that have occurred but haven't yet been reported to the insurer. The larger the IBNR, the longer claims take to surface - meaning the emergence pattern (the timeline from loss occurrence to claim reporting) is extended. Option C is correct because emergence pattern is precisely the actuarial term for how quickly incurred losses become known, and a large IBNR signals a slow, drawn-out emergence.

Why the distractors are wrong:

• A. Catastrophe procedure - refers to special claims-handling protocols after disasters; it's a process, not a measure of reporting lag.
• B. Track claims - not a standard actuarial term in this context; it's a generic phrase used as a distractor.
• D. Settlement pattern - describes how quickly known claims are paid out, which relates to case reserves and payment timing, not the delay in reporting. IBNR is specifically about the reporting lag, not the payment lag.

Memory tip: Think of "emergence" as claims emerging from the fog - a long emergence pattern means claims stay hidden in that fog for a long time, driving up IBNR. If the fog clears quickly (short emergence), IBNR stays small.

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