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Foundations of Casualty Actuarial Science

the evaluation of loss expense liabilities. Loss adjustment
expenses (LAE) can be split into two components ,
commonly called allocated loss adjustment expenses
(ALAE) and unallocated loss adjustment expenses
(ULAE).

Till 1998, the determining factor in whether or not a loss
expense was considered ALAE or ULAE was whether
the expense could be assigned to an individual claim. If
an expense could be assigned to a claim, it was
considered ALAE. This approach had made it difficult
to make comparisons between companies. E.g, claim
adjuster fees are one type of loss adjustment expense.

Claim adjusters are typically either company adjusters
or independent adjusters. The distinguishing feature is
whether or not the claim adjuster is employed by the
company. Company adjuster expenses were typically
considered ULAE and independent adjuster expenses
were typically considered ALAE.

So, depending on whether the company uses its own

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