If incurred losses developed downwards between the accounting date and the valuation date underlying the ultimate loss picks, then you can get negative IBNR.

Can you have a negative IBNR?

IBNR can be negative for any number of reasons, the most significant probably being when claims settle for less than their case estimates. Other reasons could include salvage, subrogation, recoveries from other third parties (such as other insurers for example), etc.

How is IBNR calculated?

With an estimate of the total incurred claim cost, then the calculation of IBNR is as straightforward as subtracting the claims already reported from the total incurred claim costs, as shown in Figure 1.