What is the pure loss rate?

The pure loss rate can be defined as the expected dollar loss cost per unit of exposure. Each of the calculated pure loss rates is an estimate of the pure loss rate which could be charged for the projected period.

When selecting a pure loss rate, remember:

The selected pure loss rate does not have to be one of the calculated averages.
Be careful of anomalies. For example, one very good or bad pure loss rate could distort the averages.
Carefully consider increasing or decreasing trends in the pure loss rates for each period.