Example 6 Alternative
Hello,
I was looking through example 6 related to Late Reported Claim and the rationale they used to justify why it should be REFLECT makes sense. However I was wondering unless explicitly told otherwise could we not argue that if the late reported claim can be absorbed by the IBNR reserves then we would DO NOTHING on that claim rather than REFLECT? I am using the logic applied in example 7. The way I see it is this is the purpose of IBNR (its both IBNER and IBNYR) so if its doing its job why would we do all the extra work of reflecting this claim in the work?
This would especially be true for reinsurers I feel who will post even higher IBNR's given the nature of the business. Just want to confirm if this line of reasoning would work on the exam.
Comments
No, this answer will not be acceptable The purpose of the report was to report as the entity was at the calculation date. Given that the case increase happened in November 20 during the reporting period, then it should be reflected in the AAR. In example 7, the change happened after the calculation date, which is not the same as in example 6.