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What Are Incurred But Not Reported (IBNR) Claims in Health Insurance?

Roocha KanadeNov 13, 2025

Some claims take time to reach the insurer. And there could be multiple reasons for it: delays in hospital paperwork, additional document requests, or simply because the treatment details haven’t been processed yet. Still, insurers must plan ahead and keep enough funds ready to settle these upcoming claims.

That’s where Incurred But Not Reported (IBNR) claims come in. They help insurers stay financially prepared for claims that have already happened but haven’t been reported yet. Let’s understand what IBNR claims are, how they work, and why they’re such an important part of health insurance.

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Contents

IBNR in Health Insurance
How IBNR Works
Importance of IBNR in Health Insurance
Impact of IBNR on Policyholders and Insurers
Challenges in Managing IBNR
What's the Difference Between IBNR Claims and Reported Claims?
Conclusion
Frequently Asked Questions (FAQs)

IBNR in Health Insurance

Incurred But Not Reported (IBNR) claims in health insurance are claims that have already happened but haven’t yet been reported to the insurance company.

For example, if a policyholder undergoes surgery at the end of the month but submits the claim a week later, that claim is considered IBNR. The insurer knows the cost exists, just not the details yet.

IBNR is an essential part of how insurers manage funds and ensure they have enough reserves to pay for upcoming claims, even those that haven’t been filed.

How IBNR Works

Insurance companies take a proactive approach. They look at earlier claim data and patterns to figure out what claims might still be on their way and how much they could be worth.

Actuaries, i.e., experts who specialise in risk and finance, calculate these expected costs so insurers can set aside sufficient reserves. This ensures that when the claims do arrive, there are enough funds to cover them without delay.

In simpler terms, IBNR helps insurers stay prepared for tomorrow’s claims using today’s data.

Importance of IBNR in Health Insurance

IBNR plays a vital role in maintaining financial balance. By estimating unreported claims, insurers can:

Keep enough funds ready for claim payments
Avoid sudden cash shortages when claims arrive later
Maintain fair and steady premium rates for policyholders

Without IBNR, insurers would struggle to meet unexpected costs, which could affect both claim settlements and overall pricing stability.

Impact of IBNR on Policyholders and Insurers

For insurers, IBNR acts as a financial safety net, helping them pay claims on time and plan for future expenses.

For policyholders, it ensures claim settlements happen smoothly, even when there are reporting delays. While customers may never directly see IBNR in action, it quietly supports the reliability and consistency of their health insurance coverage.

Challenges in Managing IBNR

IBNR is important, but estimating it accurately is not always easy. Here’s why:

Data gaps: Missing or delayed hospital data can affect estimates
Changing trends: Medical costs and claim patterns can shift quickly
Estimation errors: Predictions may not always match real claim numbers
Regulatory checks: Insurers must meet strict financial guidelines
Time delays: The longer a claim takes to be reported, the harder it is to predict

Actuaries regularly update their models to manage these challenges and keep estimates reliable.

What's the Difference Between IBNR Claims and Reported Claims?

To understand Incurred But Not Reported (IBNR) claims better, it helps to compare it with reported claims.

Aspect	IBNR Claims	Reported Claims
What It Means	Claims that have happened but are not yet reported to the insurer.	Claims that have been submitted and are under review or processing.
Timing	Delay exists between treatment and claim reporting.	Reported immediately or shortly after treatment.
Purpose for Insurer	Helps estimate and prepare financial reserves.	Represents active claim processing.
Visibility	Not yet visible in the insurer’s system.	Recorded and tracked within the insurer’s system.

Knowing how these claims differ shows why managing IBNR correctly is so important for insurers.

Conclusion

Incurred But Not Reported (IBNR) claims are not something that might be visible to you, but they are important to keep the insurance system running smoothly . These unseen claims ensure that insurers stay financially prepared for future payouts, even when the exact number or cost of claims is still unknown.

When insurers get their IBNR estimates right, they can handle their funds better, keep premiums fair, and pay genuine claims on time. For you as a policyholder, that means steady and reliable coverage.