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Foundations of Casualty Actuarial Science
used in relation to a claim, is the amount a claim is
worth, not the request for payment. For liability, loss
includes bodily injury, property damage, and personal
damage. For workers' compensation, loss includes
medical, indemnity, and rehabilitation benefits.
Loss adjustment expenses are the expenses
associated with settling claims. There are two types:
allocated loss adjustment expenses and unallocated
loss adjustment expenses. Allocated expenses are
attorney's fees, investigative fees, legal counsel,
investigators, expert witnesses, court costs and the
like associated with settling a particular claim.
Unallocated expenses are those expenses associated
with adjusting claims that are not allocated to
settlement of a particular claim.
They are usually the costs of claim department,
including office space, salaries and benefits, supplies
etc. However, some insurers do not use any outside
resources to settle claims, while others keep time
and expense records for the claim department and
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