The development and payment patterns associated with reported claims can be used to estimate the other loss liability components commonly called:

Question

Options

• AIncurred and reported
• BUnclaimed and losses
• CIncurred but not reported
• DUninsured and not reported

• A
  10% (4)
• B
  5% (2)
• C
  83% (34)
• D
  2% (1)

Explanation

IBNR (Incurred But Not Reported) is the correct answer because actuaries use historical claim development patterns - how reported claims grow over time and how payments emerge - to project losses that have already occurred but haven't yet been reported to the insurer. This is a core reserving technique in property-casualty insurance.

Why the distractors are wrong:

• A (Incurred and reported) describes claims already known to the insurer - these don't need estimation from development patterns since they're already in the books.
• B (Unclaimed and losses) is not a standard actuarial or insurance term; it's a fabricated distractor.
• D (Uninsured and not reported) conflates coverage status with reporting lag - IBNR is about timing of reporting, not whether a policy covers the loss.

Memory tip: Think of IBNR as the "iceberg" of a loss portfolio - the reported claims are the visible tip, and IBNR is the hidden mass below the waterline that development patterns help you size.

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