What does Bornhuetter-Ferguson technique mean?

Bornhuetter-Ferguson technique meaning in Insurance Dictionary

An actuarial technique for developing losings to approximate their ultimate quantity. A quantity for expected unreported losses (derived making use of the reciprocal associated with the loss development element (LDF)) is included with actual reported losings to obtain the estimated ultimate reduction for certain accident 12 months. The method is best whenever actual reported losings for any sort of accident year are an unhealthy indicator of future sustained however reported (IBNR) losses for the same accident year, as is usually the instance if you find a minimal frequency of reduction but a rather high potential seriousness.