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employees or uses outside vendors, the same expense
from the same type of activity could be classified in 2
different ways. The National Association of Insurance
Commissioners (NAIC) introduced new reporting
requirements for loss adjustment expenses effective
from 1/1/1998.

The goal is to have consistent reporting of expenses
among companies. Allocated loss adjustment expenses
were deemed by the NAIC to mean expenses, whether
internal or external to the company, related to defense,
litigation and medical cost containment.

Unallocated loss adjustment expenses are considered
to be all loss expenses not specifically defined under
ALAE. All adjuster fees are considered ULAE.
Effective from 1999 Annual Statement, the NAIC
changed the titles of these expenses to match the revised
definitions.

ALAE became' Defense and Cost Containment'
expenses and ULAE became ' Adjusting and Other'

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