Actuarial Reserve Estimate Calculator

Work out actuarial reserve estimate instantly with clear inputs, formula shown and shareable results.

About Actuarial Reserve Estimate Calculator

Technical reserves have three parts: case reserves on reported claims, an IBNR provision for claims incurred but not yet reported, and a loading for unallocated claims handling expense. IBNR is estimated from development patterns and is the largest source of reserving uncertainty.

Formulas

IBNR

IBNR = Reported outstanding x IBNR factor %

Total reserve

Reserve = (Case reserves + IBNR) x (1 + Claims handling expense %)

Ultimate incurred

Ultimate = Paid to date + Case reserves + IBNR

Worked example

With the default values below, Actuarial Reserve Estimate Calculator returns Total reserve required of $257,580,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Reported but unpaid claims (case reserves): 180,000,000
Claims paid to date: 420,000,000
IBNR as % of reported outstanding: 35
Claims handling expense loading: 6

Results

Total reserve required: $257,580,000.00
IBNR reserve: $63,000,000.00
Case reserves: $180,000,000.00
Estimated ultimate incurred losses: $663,000,000.00

Step by step

1Values used
2IBNR
3Total reserve
4Ultimate incurred
5Total reserve required= 257,580,000.00
6IBNR reserve= 63,000,000.00
7Case reserves= 180,000,000.00
8Estimated ultimate incurred losses= 663,000,000.00

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
Simplified reserving illustration only. Statutory reserving requires actuarial methods, development triangles, discounting and risk margins under the applicable framework. Not actuarial or accounting advice.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Simplified reserving illustration only. Statutory reserving requires actuarial methods, development triangles, discounting and risk margins under the applicable framework. Not actuarial or accounting advice.

Frequently Asked Questions

Why is IBNR needed at all?

Because claims take time to be reported, especially liability and injury claims. Without IBNR the reserve understates the ultimate cost of the year.

How is the IBNR factor derived?

From loss development triangles — chain-ladder or Bornhuetter-Ferguson methods — applied to historical reporting patterns for the class of business.