Investing Rulebook

Reported But Not Settled (RBNS): Meaning, Components, Benefits

Have you ever heard the term “reported but not settled” or RBNS in the insurance industry? If not, don’t worry, you’re not alone.

RBNS is a concept that is often overlooked or misunderstood, but it plays a vital role in the world of insurance. In this article, we will explore the ins and outs of RBNS, its calculation, and its comparison with another similar concept called “incurred but not reported” or IBNR.

By the end, you’ll have a better understanding of RBNS and its importance in the insurance landscape.

to Reported but not Settled (RBNS)

Definition and calculation of RBNS losses

What exactly is RBNS? In simple terms, RBNS refers to losses that have been reported to an insurance company but have not yet been settled.

These losses are typically incurred by policyholders and can arise from various types of claims, such as property damage, bodily injury, or liability issues. Calculating RBNS losses involves estimating the severity of these reported but unsettled claims.

Insurance companies rely on historic data, statistical models, and actuarial expertise to make these estimations. By doing so, they can allocate the necessary funds for expected settlements and maintain accurate financial records.

Comparison with Incurred but not Reported (IBNR) losses

Now that we understand the basics of RBNS, let’s take a moment to compare it with another concept called IBNR. IBNR stands for “incurred but not reported” losses, and it refers to losses that have occurred within a specific accounting period but have not yet been reported to the insurance company.

The key difference between RBNS and IBNR lies in the timing of the losses. RBNS losses have already been reported to the insurance company, while IBNR losses are yet to be reported.

Both RBNS and IBNR are important for insurance companies to consider when estimating reserves and liabilities. They help ensure that the financial statements accurately represent the potential losses the company may face.

Understanding Reported but not Settled (RBNS)

Calculation and sources of RBNS losses

Calculating RBNS losses requires a thorough understanding of the claims settlement process. Insurance companies consider several factors, such as the average time it takes to settle a claim and any legal or regulatory requirements that may impact the process.

By analyzing historical data and applying industry-specific knowledge, insurance companies can estimate the potential losses associated with RBNS. Sources of RBNS losses can include claims reported but not yet investigated, where the insurance company is still in the initial stages of assessing the validity and severity of the claim.

Other sources may include claims that have been investigated but not settled, claims in litigation, or claims with pending subrogation. Additionally, catastrophic losses, such as those caused by natural disasters, can contribute to RBNS as their resolution may take longer than typical claims.

Components of RBNS

RBNS is not a monolithic concept; it consists of various components that insurance companies need to consider when estimating potential losses. These components include claims reported but not yet investigated, claims that have been investigated but not yet settled, claims in litigation, claims with pending subrogation, and catastrophic losses.

Each of these components requires different actions and considerations by insurance companies. For example, claims reported but not yet investigated require initial internal investigations and assessments, while claims in litigation may involve legal proceedings that can extend the settlement process.

It is crucial for insurance companies to account for each component accurately to ensure they have sufficient reserves and liabilities in place.


In conclusion, reported but not settled (RBNS) losses are an essential aspect of the insurance industry’s financial management. By estimating the severity of these reported but unsettled claims, insurance companies can earmark the necessary funds and maintain accurate records of potential liabilities.

RBNS should not be confused with incurred but not reported (IBNR) losses, which refer to losses that have occurred within a specific accounting period but have not yet been reported. Understanding and accurately accounting for RBNS is crucial for insurance companies to manage risk, ensure financial stability, and provide quality coverage to policyholders.

Reported but not Settled (RBNS) vs. Incurred but not Reported (IBNR)

Similarities and differences between RBNS and IBNR losses

While both Reported but not Settled (RBNS) and Incurred but not Reported (IBNR) losses are important concepts in the insurance industry, it is essential to understand their similarities and differences. Both RBNS and IBNR involve estimating losses, but they differ in terms of reporting and the timing of incurred losses.

RBNS refers to losses that have been reported to an insurance company but have not yet been settled. These losses are known and accounted for, as they have already been reported.

On the other hand, IBNR losses refer to losses that have occurred within a specific accounting period but have not yet been reported to the insurance company. These losses are unknown and have to be estimated.

Estimating RBNS losses involves calculating the severity of reported claims that are still pending settlement. Insurance companies rely on historical data, statistical models, and actuarial expertise to make these estimations.

The goal is to allocate sufficient funds for expected settlements and maintain accurate financial records. Estimating IBNR losses, on the other hand, involves predicting the number and severity of claims that have occurred within a specific accounting period but have not yet been reported.

These losses are typically estimated using actuarial modeling techniques. Insurance companies analyze historical patterns, industry trends, and other relevant data to make these predictions.

In summary, the primary distinction between RBNS and IBNR lies in the timing of the losses. RBNS losses have been reported but not settled, while IBNR losses have occurred but not yet been reported.

Both concepts are crucial for insurance companies to accurately estimate reserves, liabilities, and potential losses.

Importance and implications of estimating RBNS and IBNR reserves

Accurately estimating both RBNS and IBNR reserves is of utmost importance for insurance companies. These estimates directly impact their profitability, investment decisions, pricing, and ability to handle unforeseen claims.

Insurance companies aim to maintain profitability by charging appropriate premiums to policyholders. Estimating RBNS and IBNR reserves allows insurers to account for potential losses not yet settled or reported.

By accurately assessing these risks, insurers can price their policies accordingly, ensuring that the premiums charged cover expected claims and expenses. Underestimating reserves for RBNS and IBNR losses can result in financial losses and potentially lead to insolvency.

Overestimating these reserves may result in unnecessarily high premiums, making the insurance product less competitive in the market. Accurate estimation of reserves is also crucial for investment purposes.

Insurance companies typically invest the premiums they receive to generate additional income. Estimating RBNS and IBNR reserves ensures that insurers set aside sufficient funds for potential claims, allowing them to make informed investment decisions.

Without accurate estimation, insurers may face liquidity issues or miss out on investment opportunities. Another implication of accurate RBNS and IBNR estimation is the need for price adjustments.

As insurance companies track the development of reported and settled claims, they may need to adjust premium rates in subsequent periods to compensate for any deviations from initial estimates. Timely adjustments help maintain a fair and sustainable pricing structure, ensuring policyholders receive adequate coverage without burdening them with excessive premiums.

Failure to accurately estimate RBNS and IBNR reserves can have severe consequences, including insolvency. Inaccurate estimations may lead to inadequate reserves, creating financial strains when unexpected claims arise.

This can jeopardize an insurer’s ability to honor policyholder claims and fulfill its obligations. Insolvency not only affects policyholders but also has broader implications for the stability of the insurance industry as a whole.

Benefits of Reported but not Settled Estimates

Importance of accurate estimation for insurance companies

Accurate estimation of Reported but not Settled (RBNS) losses brings several benefits to insurance companies. Firstly, it helps insurers maintain profitability and financial stability.

By estimating RBNS losses accurately, insurance companies can allocate the necessary funds to cover expected claim settlements. This prevents an imbalance between incoming premiums and outgoing claim payments, ensuring that the company remains financially secure.

Additionally, accurate estimation of RBNS losses enables insurance companies to make informed investment decisions. Insurers invest the premiums they receive to generate income and enhance their financial position.

By accurately estimating RBNS, insurers can allocate the appropriate amount of funds for investment purposes, ensuring they have the potential to generate sufficient returns.

Potential consequences of underestimation or overestimation

Underestimation or overestimation of RBNS losses can have significant consequences for insurance companies. Underestimating RBNS reserves can lead to inadequate funds to cover claim settlements.

This can strain the company’s financial resources, potentially resulting in delayed or insufficient claim payments. Moreover, underestimation may give policyholders a false sense of security, as they may be under the assumption that adequate funds are available for claim settlements when, in reality, the reserves fall short.

On the other hand, overestimation of RBNS reserves can result in the tying up of excessive capital. This reduces the available funds for investment or may necessitate unnecessary price adjustments, leading to uncompetitive premiums.

Overestimation also creates the risk of overcharging policyholders, resulting in potential dissatisfied customers and decreased market competitiveness.


Accurate estimation of Reported but not Settled (RBNS) and Incurred but not Reported (IBNR) losses plays a crucial role in the insurance industry. By estimating these reserves effectively, insurance companies can ensure profitability, maintain financial stability, and fulfill their obligations to policyholders.

Additionally, accurate estimation allows insurers to make informed investment decisions and adjust pricing accordingly. Underestimation or overestimation of reserves can have severe consequences, including financial losses, insolvency, and strained relationships with policyholders.

Thus, it is essential for insurance companies to employ robust actuarial modeling techniques and analyze historical data to accurately estimate RBNS and IBNR reserves.

Miscellaneous Insurance Claim Terminology

Insurance claim settlement and reporting

When it comes to insurance claims, there are several terms and processes that policyholders should be familiar with. Two essential elements are claim settlement and reporting.

Claim settlement refers to the process of resolving a claim and making payment to the policyholder. After a claim has been reported to the insurance company, it is investigated to determine its validity and the amount of loss incurred.

Once the investigation is complete, the insurance company will either approve or deny the claim. If the claim is approved, the insurer will provide a settlement offer to the policyholder, which typically includes a payment amount and any applicable deductibles.

The policyholder then has the choice to accept or negotiate the settlement offer. Claim reporting is the initial step in the claims process.

As soon as a policyholder becomes aware of a loss covered by their insurance policy, they should report the claim to their insurance company. Reporting the claim promptly is crucial, as it allows the insurance company to begin the necessary investigation and start the claims settlement process.

Policyholders should provide all relevant details about the loss and any supporting documentation to assist with the claim evaluation.

Different elements of claims incurred and claims paid

Claims incurred and claims paid are two distinct components of insurance claims that policyholders should understand. Claims incurred refer to the total costs associated with the settlement of claims during a specific period.

This includes all reported claims that have been approved and are in the process of settlement or have already been settled. Claims incurred also take into account any deductibles or policy limits that may apply.

These costs cover various elements such as repairs, medical expenses, legal fees, and any other expenses related to the claim settlement. Claims paid, on the other hand, represent the amount of money the insurance company has already disbursed to policyholders for settled claims.

When a claim is approved and the settlement offer is accepted by the policyholder, the insurance company will make the payment required to settle the claim. This payment may cover the full claim amount or a portion, depending on the terms and conditions of the policy.

It’s important to note that claims incurred and claims paid may not always align. Insurance companies typically have a process for managing claims and may disburse payments over time as settlements are reached.

This means that while claims incurred may represent the total amount of liability faced by the insurance company, claims paid may represent a portion of that liability that has been disbursed to policyholders.

Reasons for Insurance Company Settlement Strategies

Reasons for insurance companies to settle claims quickly

Insurance companies often have strategies in place to settle claims quickly, benefiting both policyholders and the insurance company itself. One primary reason is time and resource efficiency.

By settling claims promptly, insurance companies can reduce the time and resources spent on investigating and managing claims. This enables them to focus on other aspects of their business and provide efficient services to policyholders.

Settling claims quickly can also result in higher claim payouts. Insurance companies understand that delays in settlement can lead to dissatisfaction among policyholders.

Quick settlements can help maintain a positive relationship between the insurance company and policyholders, ensuring continued customer satisfaction and loyalty. Moreover, swift settlements can mitigate additional costs that may arise due to a prolonged claims settlement process, such as legal fees or expenses related to ongoing damage.

Reasons for insurance companies to delay settlement

While insurance companies generally aim to settle claims quickly, there are instances where they may strategically delay settlement. These delays are often driven by certain reasons or tactics employed by insurance companies.

One reason for delaying settlement is negotiation tactics. Insurance companies may use delay as a negotiation strategy to encourage policyholders to settle for a lower amount or accept less advantageous terms.

By prolonging the settlement process, insurers may hope that policyholders become more willing to accept a lesser payment out of frustration or financial need. Though this tactic can be perceived as unfavorable by policyholders, it is within the insurance company’s rights to employ such strategies.

Another reason for delaying settlement is to establish a statute of limitations defense. Each jurisdiction has a specific time limit within which a claim must be settled or pursued legally.

By delaying settlement until the expiration of the statute of limitations, insurance companies seek to avoid having to pay the claim. However, it’s important for policyholders to be aware of their rights and consult legal advice if they suspect the statute of limitations defense is being used unfairly.

Additionally, insurance companies may have statutory reporting requirements that govern claims settlement timelines. These requirements vary by jurisdiction and the type of insurance policy.

By carefully managing the timing of settlement, insurance companies can ensure compliance with these reporting requirements.


Understanding the various elements of insurance claim terminology is crucial for policyholders to navigate the claims settlement process. Claim settlement involves resolving a claim and making payments to the policyholder, while claim reporting is the initial step of notifying the insurance company about the loss.

Policyholders should also be aware of the differences between claims incurred and claims paid, as well as the reasons behind insurance company settlement strategies. By having a comprehensive understanding of these concepts, policyholders can make informed decisions and effectively navigate the claims process.

Reporting Reported but not Settled (RBNS) Losses

Purpose and implications of reporting RBNS losses

Accurate and transparent reporting of Reported but not Settled (RBNS) losses is crucial for insurance companies. It serves several purposes and has implications for stakeholders, including investors and analysts.

One primary purpose of reporting RBNS losses is to adhere to the principle of accounting conservatism. Accounting conservatism requires companies to recognize and disclose potential losses as soon as they are probable, even if the exact amount cannot be determined with certainty.

By reporting RBNS losses, insurance companies proactively account for potential liabilities, ensuring that their financial statements reflect the potential downside risks. Transparent reporting of RBNS losses also enhances the overall transparency of insurance companies.

This transparency allows investors and analysts to assess the financial health and risk profile of insurance companies accurately. By disclosing RBNS losses, insurance companies provide a more comprehensive and realistic view of their potential exposure.

This enables stakeholders to make informed decisions and properly evaluate the financial performance and stability of the insurance company. Furthermore, failure to report RBNS losses accurately can have significant financial implications.

If an insurance company underreports RBNS losses, it may create a misleading picture of its financial condition. When the actual settlements occur, there may be a sudden increase in claim payments, which can negatively impact financial performance and erode investor confidence.

In extreme cases, underreporting RBNS losses can lead to allegations of financial misrepresentation or even regulatory penalties. On the other hand, overreporting RBNS losses can also have adverse effects, potentially leading to unwarranted skepticism about the financial stability of the insurance company.

Providing information on potential financial outcomes

Reporting RBNS losses provides valuable information to stakeholders regarding potential financial outcomes. Insurance companies face a degree of uncertainty when it comes to estimating the settlement value of reported but unsettled claims.

By disclosing RBNS losses, insurance companies communicate to stakeholders that these claims are pending and can potentially affect future financial outcomes. Insurance companies employ various techniques to determine the settlement value of RBNS losses.

Actuaries play a crucial role in analyzing historical data, actuarial models, and industry-specific knowledge to estimate the potential outcomes of reported but unsettled claims. However, because the final settlements are yet to be determined, the estimated settlement values are subject to change.

The disclosure of RBNS losses allows stakeholders to understand the potential financial impact on the insurance company. Investors and analysts can assess the adequacy of reserves set aside for potential settlements.

This information is particularly important for assessing the solvency and stability of insurance companies as it provides insight into their ability to meet future claim payments. While the reported RBNS losses provide essential information, it’s important to note that they do not represent guaranteed future payouts.

The final settlement values may differ from the estimated amounts due to various factors, such as legal battles, negotiations, or unforeseen developments. Nonetheless, disclosing RBNS losses provides stakeholders with a sense of potential financial outcomes and assists them in making informed decisions regarding investments and risk assessment.


Accurate reporting of Reported but not Settled (RBNS) losses is critical for insurance companies. It ensures accounting conservatism, enhances transparency, and provides information on potential financial outcomes to investors and analysts.

By reporting RBNS losses, insurance companies demonstrate their commitment to disclosure and financial responsibility. This helps stakeholders evaluate the financial health and stability of the insurance company accurately.

However, it’s important to recognize that RBNS losses represent estimated values, and the actual settlements may deviate from these estimates. Overall, transparent reporting of RBNS losses contributes to increased confidence in the insurance industry and promotes informed decision-making.

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