DEFINITION of ‘Reported But Not Settled (RBNS)’
Losses that have been reported to an insurance company, but that have not been settled by the end of the accounting period. Reported but not settled (RBNS) losses are calculated using an estimation of the severity of the loss based off of the available information from the claims settlement process.
BREAKING DOWN ‘Reported But Not Settled (RBNS)’
Calculating reported but not settled losses (RBNS) requires an understanding of where claims are in the settlement process. The calculation is an estimate based off of the information that an insurer has at hand, including information from court documents. The precision of the calculation depends on the type of loss that is being settled, with more complex claims being more difficult to estimate.
The amount that an insurer places in reserve to cover RBNS losses depends on state insurance regulations. For example, insurance companies may be required to set aside the average value for a similar class of claim for each claim that has not been settled.
RBNS losses differ from incurred but not reported (IBNR) losses in that the former has been reported to the insurance company, but are similar in that neither have been settled during the accounting period. In many cases it may be difficult for an actuary to tell the difference between IBNR and RBNS losses, depending on the model that is being used. This is because claims are developed differently according to the reporting year and the accounting year. These claims may be forecasted separately.
Insurance companies calculate their claims and the losses associated with those claims using a variety of different sources. These include liabilities from the contracts that they underwrite as well as the contracts that they ceded to reinsurers, state regulations, court opinions concerning claims, and actuarial estimates. This information applies to loss adjustment expenses and claims expenses.