Term
| Three Aspects of Economic Uncertainty of Losses |
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Definition
- Occurrence
- Timing
- Financial Impact
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Term
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Definition
Total UW Expenses
Total Written Premium |
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Term
LAE Ratio
(For Operating Expense Ratio, not indications) |
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Definition
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Term
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Definition
| UW Expense Ratio + LAE Ratio (to EP) |
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Term
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Definition
Operating Ratio + Loss Ratio
Where Loss Ratio =
- PP/Avg EP
- Total Losses/Total EP
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Term
| LAE ratio for use in indications |
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Definition
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Term
Common Use For:
LAE Ratio (for OER) |
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Definition
- To Determine if costs associated with claim settlement are stable or not
- Compare to other companies as benchmark for its claims settlement procedures
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Term
Common Use For:
Underwriting Expense Ratio |
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Definition
- Compare actual vs expected based on general inflation
- Compare to other companies as benchmark for policy acquisition and service expenditures
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Term
| How to Subdivide UW Expense Ratio |
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Definition
Subdivide into:
- Expenses generally incurred at onset of policy period(commissions, TL&F, other acquisition) - WRITTEN
- Expenses generaly incurred throughout policy period (general expenses) - EARNED
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Term
| Common Uses for Operating Expense Ratio (OER) |
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Definition
- Monitor operational expenditures
- Key to determining overall profitability
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Term
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Definition
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