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The portion of the rate that covers projected claim payments and loss adjusting expenses.
What are loss costs?
The amount that is included in an insurance rate to cover the insurer's expenses and that might include loss adjustment expenses but that excludes investment expenses.
What is expense provision?
Income an insurer earns from premiums paid by policyholders minus incurred losses and underwriting expenses.
What is underwriting profit?
The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy.
What is loss adjustment expense (LAE)?
The process insurers use to calculate insurance rates, which are a premium component.
What is ratemaking?
The average amount of money an insurer must charge per exposure unit in order to be able to cover the total anticipated losses for that line of business.
What is pure premium?
Loss adjustment expenses that cannot be readily associated with a specific claim.
What are unallocated loss adjustment expenses (ULAE)?
An amount included in the insurance rate to protect insurers against the possibility that actual claims or expenses will exceed projections.
What is profit and contingencies?
The price of the insurance coverage provided for a specified period.
What is the premium?
The expenses an insurer incurs to investigate, defend, and settle claims that are associated with a specific claim.
What are allocated loss adjustment expenses (ALAE)?
The price per exposure unit for insurance coverage.
What is the rate?
Costs incurred by an insurer for operations, taxes, fees, and the acquisition of new policies.
What are underwriting expenses?
Exposure unit for which an insurer has provided a full year of coverage.
What is an earned exposure unit?