Question

How do insurance companies handle IBNR?

a.

They ignore IBNR losses

b.

They use objective estimates to recognize IBNR losses

c.

They wait for policyholders to report losses

d.

They reject claims related to IBNR

Answer: (b).They use objective estimates to recognize IBNR losses Explanation:Insurance companies use subjective estimates to recognize IBNR losses since the actual value of these losses is unknown.

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Q. How do insurance companies handle IBNR?

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