IBNR vs Case Outstanding Reserves: General Insurance in a simple english

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Now basically there are two types of reserves: IBNR which is done by actuaries and other is "Case Outstanding" which is done by claims professionals. Let's see the example: I am insurer and now insured called me they met with an accident and wants to claim. Now our person will go there and find out that there will 1000$ payment. So now that 1000$ will be case outstanding. Suppose he pay 500$ upfront and keep reserves for 500$ then paid amount =500$ and case outstanding = 500$. Reported claims = paid claims + case outstanding =500+500=1000$. Now what about IBNR?

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IBNR is based on the retrospective approach that is past data, it will look at the reported claims and then project accordingly. It has nothing to do with individual claims, it will look at aggregate number of claims and amount paid



IBNR is an actuarial estimate of future payments on claims that have occurred but have not yet been reported to us. In addition to this provision for late reported claims, we also estimate, and make a provision for, the extent to which the case reserves on known claims may develop and for additional payments on closed claims, known as “reopening.” IBNR reserves apply to the entire body of claims arising from a specific time period, rather than a specific claim.

Most of our IBNR reserves relate to estimated future claim payments on recorded open claims


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