A loss projection, also known as a loss pick, includes actuarial estimates of ultimate loss costs for completed policy periods and projected losses for current and future periods. This type of analysis can be most useful in helping to define appropriate levels of risk retention and policy limits.
A loss projection is typically completed before an insurance renewal to be used in market negotiations. General uses include:
- Insurance budgeting
- Determination of funding requirements within deductible or self-insured retention
- Negotiation of price for aggregate coverage
- Selection of retention levels
- Cost allocation
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