Actuarial & Insurance

Basic

Claim Frequency

Number of claims per unit of exposure.

Formula

f = \frac{N}{E}

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Variables

fFrequency

NNumber of claims

EExposure (policy-years)

Example

500 claims over 10,000 policy-years: f = 0.05

Did You Know?

Splitting risk into frequency and severity lets actuaries model 'how often' and 'how big' separately.

actuarial frequency claims

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More in Actuarial & Insurance

Pure Premium

Expected claim cost per policy: frequency times severity.

Gross Premium

Premium that covers claims plus an expense/profit load.

Loss Ratio

Claims paid divided by premiums earned.

Combined Ratio

Total cost ratio: losses plus expenses vs premium.

Expected Value of a Claim

Probability-weighted average of possible claim amounts.

Present Value of an Annuity

Value today of a stream of future payments.