A phrase in some reinsurance agreements, usually in the following context “This agreement is considered by the parties hereto as an honorable undertaking, the purpose of which is not to be defeated by a strict or narrow interpretation of the language thereof.”

The International Association of Insurance Supervisors, established in 1994, represents insurance regulators and supervisors of more than 200 jurisdictions in nearly 140 countries, constituting 97% of the world’s insurance premiums. The IAIS acts as the global standard setter for insurance regulation. The IAIS issues Principles, Standards and Guidance to help insurance supervisors set regulations and carry out their role in supervising insurance companies.

Insurance Core Principles, Standards, Guidance and Assessment Methodology established by the IAIS to provide uniform international standards and guidance for the regulation of the insurance industry. The IAIS encourages members to have the 26 ICPs incorporated or reflected in all of its members’ regulatory frameworks. Although not binding on IAIS member jurisdictions, the ICPs are used by the IMF as a basis for carrying out assessments of the insurance sector under the Financial Sector Assessment Program (FSAP).

International Monetary Fund, an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

is a provision in claims and losses already reported but which have not yet been paid in full for potential increases in the value of these claims when they are ultimately paid; decreases can occur, although infrequently. It is created because reported claims reserves tend to increase from the time a claim occurs until the claim is settled. Changes in insurance company case reserves, during the accounting period and established by judgment and/or formula, often result from a lag in information on liability and damages.
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UK: An expression used by insurers when referring to the inadequate reserving of past claims.

REINSURANCE: An actuarial estimate of amounts required to pay ultimate net losses that refers to losses that have occurred but have not yet been fully and finally settled/paid . IBNR has two components: (1) a provision for loss and loss adjustment expense (“LAE”) reserves in excess of the current reserves on individual claims that have been reported during the accounting period but which have not yet been paid in full, reflecting the potential increase in the value of these claim values when they are ultimately paid (IBNER – see below); (2) a provision for loss and LAE reserves on claims that have occurred but have not yet been reported during the accounting period (IBNYR – see below).
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UK: At the end of an accounting period, the insurer creates a reserve to cover the estimated cost of losses that have occurred but have not yet been reported. The ‘INBR’ reserve is quite significant in liability insurance as many claims have a ‘long tail’. The regulatory authority prescribes the form in which INBR claims must be included in the FSA returns.
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MEDICAL,USA: Cash reserve established by an insurance company or managed care plan to pay for medical services that have been provided to members but for which claims have not yet been received by the payer. These cash reserves are created by using an estimate based on prior insurance claims submissions. Also called unreported claims .
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MEDICAL,USA: Dollar amount the insured payer’s plan builds up to anticipate unknown medical expenses.
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REINSURANCE: The liability for future payments on losses which have already occurred but have not yet been reported in the reinsurer’s records. This definitely may be extended to include expected future development on claims already reported. Thus, technically IBNR covers the field from (a) those individual losses that have occurred but have not been reported to the insurer or reinsurer to (b) that amount of loss that may arise from a known loss which has been reported as an event but which has not been recorded in full to its ultimate loss value (known as loss development).
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An estimate of the liability for claim-generating events that have taken place but have not yet been reported to the insurer or self-insurer. The sum of IBNR losses plus incurred losses provides an estimate of the total eventual liabilities for losses during a given period.
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Estimated losses which an insurer or reinsurer, based on its knowledge or experience of underwriting similar contracts, believes have arisen or will arise under one or more contracts of insurance or reinsurance, but which have not been notified to an insurer or reinsurer at the time of their estimation.

is a provision for loss reserves and LAE on losses and claims that have occurred but have not been made known to the insurer.

For a specific reinsurance period (typically annual) incurred loss is calculated as paid losses during the period, plus outstanding loss at the end of the period, minus outstanding losses at the beginning of the period irrespective of when the loss actually occurred or when the original policy attached. Example: For the period 1/1/XX – 12/31XX, if outstanding losses at 1/1 are 15, paid losses during the year are 20, and outstanding losses at 12/31 are 12, then Incurred loss for the period 1/1/XX – 12/31/XX = 17 (32-15)

A clause in liability excess of loss Reinsurance tying treaty limits to an appropriate price or earnings index.

A provision, typically in an excess of loss reinsurance contract, whereby the ceding company agrees to share the excess reinsurer’s (leveraged) inflation risk. It typically involves a publically recognized measure of inflation (e.g., wage inflation index) that is used as a trigger mechanism to adjust the excess of loss retention thus allowing changes in inflation to be more equitably shared by the cedent and the excess reinsurer. This sharing of inflation risk may be recognized in the price of the excess of loss reinsurance.