There is a general upward trend in liability and workers compensation claim
totals after the initial reporting period called "loss development."
A common method of adjusting losses for the growth in claims and incurred but
not reported (IBNR) losses is to apply loss development factors (LDFs). LDFs
are used to arrive at the ultimate value that can be expected for a claim. For
example, an LDF of 1.50 means that for every $1 of current claims, the ultimate
payout will be $1.50. A total of $50,000 in current claims would result in an
ultimate payout of $75,000.