Original loss curves, such as exposure curves, increased limit factors (ILFs), and excess of loss scales, are extremely useful for both property and casualty businesses. They provide consistent internal pricing and can be very helpful in the absence of historical claims experience, or when data is sparse, irrelevant, or not credible.
In this whitepaper, Shani Clarke, actuarial consultant at Verisk Europe, discusses the origins and applications of original loss curves, looking at specific examples for property and casualty insurance.
The paper provides London Market re/insurers and actuaries with valuable insight into how original loss curves can be used to help structure complex insurance and reinsurance structures and provide an effective benchmark to help estimate loss for each individual layer.
