Glossary

Loss development describes how a claim changes from the original loss reserved by the insurer until the claim is closed. Loss development can be significant on long-tail lines of coverage where there tends to be a lag between the reporting and payment of claims, such as workers compensation and liability claims.

A loss development factor (LDF) is used to adjust losses to account for the general upward trend in liability and workers compensation claim totals after the initial reporting period through the closing of the claim. LDFs are used to arrive at the ultimate value that can be expected for a claim.

Loss event refers to the total losses to the ceding company or to the reinsurer resulting from a single cause such as a windstorm.

Loss forecasting refers to predicting future losses through an analysis of past losses.

A loss limit is a property insurance limit that is less than the total property values at risk but high enough to cover the total property values actually exposed to damage in a single loss occurrence.

Loss limitation is an optional feature of a retrospective rating plan that limits or "caps" the amount of loss (usually at the $100,000 level, or more) that would otherwise be applied to the calculation of premium.

Loss loading is a factor applied to pure loss costs or expected losses to produce a premium rate.

Loss mitigation underwriting (LMU) is the process of providing insurance coverage for existing litigation or for litigation that is imminent.

Loss of consortium suits are a legal action often brought by the spouse of the injured worker that alleges the loss of spousal services including but not limited to companionship, help with household duties, and sexual relations.

Loss of income coverage is a type of business interruption coverage that does not include a coinsurance clause but limits recovery to loss incurred during a specified period (typically 120 days) after the direct damage loss.