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Foundations of Casualty Actuarial Science

53. The specific exposure unit used for a given type of
insurance depends upon several factors, including
reasonableness, ease of determination, responsiveness
to change, and historical practice.

54. Claim
Generally insurers maintain claim data based upon
accident date - the date of the occurrence which gave
rise to the claim, and report date - the date the insurer
receives notice of the claim.

55. Severity
Average loss per claim is called severity. Severities can
be on a pure loss basis, excluding all loss adjustment
expenses, or they can include allocated or total loss
adjustment expenses.
The loss component can be paid, case-incurred or
projected ultimate and the claims component can be
reported, paid, closed, or projected ultimate.
S= L
C

where
S = severity

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