expense load
The expense load is an amount the insurer adds to an insurance premium to cover business expenses and the contingencies, including cost of capital, shown mathematically as follows.
Additional Information
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
