Term
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Definition
The relationship of incurred losses plus loss adjustment expense to earned premiums.
Net Incurred Losses divided by Net Earned Premium |
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Term
| Loss Adjustment Expense Ratio (LAE) |
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Definition
The cost involved in an insurance company's adjustment of losses under a policy. - The expenses paid out to settle a loss.
- Includes: claims adjusters, coverage payments
- Net Loss Adjusting Expense divided by Net Earned Premium
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Term
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Definition
Measures the company's overall operating profitability from investment and UW activity but does NOT include capital gains, income taxes, or WEB. - OR more than 100 = unprofitable
- OR less than 100 = profitable
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Term
| Underwriting (UW) Expense Ratio |
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Definition
Salaries + commissions + overhead expenses + office rent + fees charged for memberships in industry associations and bureaus + guaranty association assessments + taxes (not including federal, foreign or real estate taxes). = Net UW Expenses divided by Net Written Premium |
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Term
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Definition
| Portion of premium that represents coverage already provided; the portion of premium that belongs to the insurer based on the part of the policy period that has passed. |
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Term
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Definition
Incurred but not reported - "There is a PH having a loss right now."
- It has occurred but has not yet been reported.
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Term
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Definition
| The amount of loss (paid or change in outstanding) fotr which the insurer has become liable. |
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Term
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Definition
| Expenses related to losses sustained by the company (paid or change in unpaid loss expense reserves) |
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