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expense load

An amount the insurer adds to an insurance premium to cover business expenses and the contingencies, including cost of capital, shown mathematically as follows.

Premium = Claims + Expenses + Profit loading

Profit loading is usually expressed in factor "times" or "percentage" of expected claims and business expenses or shown mathematically as the following.

Premium target = (1+ r) X

r = profit loading factor expressed in percentage

X = sum of claims losses expected and other business expenses – administrative costs, commissions, overhead cost

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