What is IBNR? Incurred but not reported reserves explained with a worked example
The term is defined and explained for direct insurers with a worked practical chain-ladder example and an introduction to Solvency II treatment.
TP Tool
So much more than triangles
Our tool for calculating technical provisions, TP Tool, is made to complete a lot of practical work. So, you can speed up the processes setting the IBNR, discounting, valuating claim handling reserves and much more. You can even lightning-fast populate a whole number of complicated reporting templates with the automatic QRT-Generator.
Data Importer
Amazing integration possibilities
Both claim and premium transactions are loaded into TP Tool. You can process millions of records with ease. Data is structured on a product and cover level for claims, and the same applies to premiums. TP Tool automatically scans for data completeness and inconsistencies, easing your data quality assessment prior to analysis.
Risk Group Designer
Design your analysis structure
Design how your transactions should be analysed by defining homogeneous risk groups. You can easily capture new characteristics and adjust how data flows into your reserving models. The Risk Group Designer gives you full control over the grouping of your data, ensuring that your analysis reflects the true risk profile of your portfolio.
Statistical Engine
Automated reserving calculations
TP Tool automatically builds triangles from your transaction data. A range of standard models and development factors are available, enabling you to quickly produce reliable reserve estimates. The statistical engine supports multiple methodologies and provides comprehensive diagnostics to support your actuarial judgement.
Reporting Processor (QRTs)
Lightning fast. All you need.
TP Tool also automatically builds triangles for your Solvency II reporting. It automatically populates QRTs like S.05.01, S.17.01, S.18.01, S.19.01, S.20.01, S.21.01, S.28.01, S.29.02 and S.29.03.
Actuarial rigour. Executive-ready results.
Built by actuaries for actuaries, TP Tool keeps assumptions, model choices, diagnostics and outputs transparent and traceable. CROs and CFOs get a clear line from underlying data to technical provisions and Solvency II reporting, making review and sign-off more efficient.
Automatic Currency Conversions
TP Tool offers a rapid and smooth currency conversion of the entire reporting package. Captives may wish to produce their reporting packages in the same currency as their financial statements. Nonetheless, Financial Authorities may require other reporting currencies for solvency II submission. TP Tool offers a lightning-fast conversion with automatic look-up at ECB for the conversion rate as at the reference date of the package.
Multi-Entity Support
Groups can define all their legal entities under their reporting tool account. You can easily produce reporting for all entities, and they will be naturally organised. If you prefer separated accounts with separated data as well for each legal entity, we provide easy access. One username – multiple access. You simply choose what entity you work with at logon. TP Tool makes it easy to work as a consultant for multiple insurance companies.
Switching to TP Tool
You can easily switch to TP Tool. We provide you with a free and noncommittal account in the full test and transition period. Assistance with the transition period is available and we are ready to give you a hand with the integration of some of your internal sources.
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TP Tool: actuarial reserving software for IBNR and Solvency II technical provisions
TP Tool is technical provisions software for non-life insurers and captives. It quickly takes a portfolio from raw transactions to a signed off Solvency II submission inside one system.
From claim and premium transactions to triangles
Reserving in TP Tool starts at transaction level. Claim transactions and premium transactions are loaded as they are, millions of records at a time, and the tool checks them for completeness and inconsistencies before any calculation runs. In the Risk Group Designer the actuary defines homogeneous risk groups that match how the business is actually written. TP Tool then automatically builds run-off triangles for each group. The spreadsheet aggregation step that usually sits between the claims system and the reserving model is gone.
A complete reserving workflow
Once the triangles exist, the rest of the workflow is in the same place: best estimate reserves, IBNR calculation, premium provisions, claims cash-flow projections, discounting of technical provisions, inflation and claims-handling expenses. Reserve uncertainty is assessed next to the central estimate, so the sign off is based on a range rather than a point. The results flow straight into Solvency II reporting, and the audit trail from transaction to reported figure stays unbroken.
Transparent comparison of actuarial models
A range of standard models and development factors is available, including Chain-Ladder, Bornhuetter-Ferguson and fixed loss ratio estimates. They can be run side by side for each risk group, with diagnostics that show how each method reacts to the data. Every intermediate figure is visible, which makes the calculation easy to review and easy to explain to an auditor.
Solvency II QRT automation
TP Tool automatically populates the QRTs relating to technical provisions: S.05.01, S.17.01, S.18.01, S.19.01, S.20.01, S.21.01, S.28.01, S.29.02 and S.29.03. Currency conversion uses ECB rates as at the reference date, which matters for captives reporting in a currency other than their accounts. Groups and consultants can keep several legal entities under one login and switch between them at logon.
Deep learning model for claims reserving, currently in development
A generic deep learning model using both observed payments, case reserves and claim counts is being tested as an independent benchmark next to the classical methods. Its job is to challenge the actuary’s best estimate, not to replace actuarial judgement.
Getting started
A free, non-committal trial account is available for the full test and transition period, so you can load your own data and see the triangles before deciding anything. Contact us to request a trial or a demo.
TP Tool: Frequently asked questions
What is IBNR and how does TP Tool calculate it?
IBNR stands for incurred but not reported. It covers claims that have already happened but the insurer does not know about yet, plus further development on claims it does know about. TP Tool estimates IBNR from your own claim transactions: it builds run-off triangles for each homogeneous risk group and applies Chain-Ladder, Bornhuetter-Ferguson or a fixed loss ratio, so the IBNR figure can be traced back to the underlying data.
Which reserving methods are available?
Chain-Ladder, Bornhuetter-Ferguson and fixed loss ratio, each with a choice of development factor selections and expert judgement. All three can be run on the same triangle and compared side by side, with diagnostics that show how each method reacts to the data. A deep-learning benchmark is in development.
What data do I need to get started?
Claim transactions and premium transactions at the level your systems already hold them. There is no need to pre-aggregate anything. TP Tool loads millions of records, checks them for completeness and inconsistencies, and groups them into homogeneous risk groups in the Risk Group Designer.
Does it handle discounting, inflation and claims-handling expenses?
Yes. Future claims cash flows are projected per risk group and discounted, and inflation assumptions and claims-handling expenses are applied in the same run. The technical provisions come out on a Solvency II basis without a separate spreadsheet step.
Which Solvency II QRTs does TP Tool populate?
S.05.01, S.17.01, S.18.01, S.19.01, S.20.01, S.21.01, S.28.01, S.29.02 and S.29.03, filled automatically from the reserving results. Currency conversion uses ECB rates as at the reference date of the package.
Can I try TP Tool before subscribing?
Yes. A free, non-committal trial account is available for the full test and transition period, and we help with the integration of your internal data sources. Contact us to set it up.
From the blog
Technical provisions under Solvency II: best estimate, risk margin, and how they land in S.12.01 and S.17.01
Solvency II technical provisions are the best estimate plus the risk margin. Discounting, the 2027 risk margin change and a worked example into S.17.01.
Chain-ladder or Bornhuetter-Ferguson: choosing a reserving method per risk group
Chain-ladder projects past claims development. Bornhuetter-Ferguson uses an expected loss ratio. Compare their assumptions, limitations and use by risk group.