Glossary

The expected loss (EL) is the estimated loss frequency multiplied by estimated loss severity and summed for all exposures. This measure of loss refers to a best estimate of the total losses of a particular type—for example, workers compensation or general liability—of an organization that is expected during a given period (normally a year).

Expected morbidity refers to the expected instance of sickness or injury for a given group over a given period.

Expected mortality refers to the expected instance of death for a given group over a given period assumed in setting life insurance rates.

Expected or intended in an insurance context is a general and auto liability (also hospital errors and omissions (E&O)) policy exclusion for injury or damage that is expected or intended from the standpoint of the insured. An exception to the exclusion may provide coverage for liability from the use of reasonable force in the defense of persons or property (by someone such as a security guard).

Expected reinsurer deficit (ERD) is a method of testing reinsurance contracts to determine whether there is actual risk transfer. ERD incorporates the present value underwriting loss severity and loss frequency into a single measure. It is the probability (or frequency) of a reinsurer loss multiplied by the loss size itself and calculated over the entire range of loss outcomes. ERD is more robust than simply looking at the 90th percentile outcome because it takes into consideration all loss outcomes (including those beyond the 90th percentile). While such an approach has not replaced the 10/10 Rule in practice, it has been increasingly used in risk transfer evaluations.

Expediting expenses are costs to complete repairs to put the insured back in business as rapidly as possible, even if it is only a temporary arrangement. Expediting expense coverage is normally included in equipment breakdown policies. Expediting expenses are also included in extra expense coverage as part of a commercial property policy.

Expediting expense coverage is coverage under a property or equipment breakdown policy for expenses of temporary repairs and costs incurred to speed up the permanent repair or replacement of covered property or equipment. Usually the recovery of expediting expenses is limited to the extent that the expenses serve to reduce the loss. However, coverage can be arranged to provide full reimbursement.

Expense in an insurance context refers to the cost of operating the insurance business exclusive of losses or claims.

An expense allowance is the compensation paid to life insurance agents over and above commission to reimburse them for certain expense items incurred in doing business.

Expense constant is a fixed, flat expense charge applied to every workers compensation policy in states using advisory rates. The charge applies in addition to the premium developed for that policy and recognizes that some of the administrative costs associated with writing a workers compensation policy do not vary with the amount of premium and should, therefore, not be included in the factors that are used to develop rates.