What Does Loss Development Factor Mean?

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What does Loss Development Factor mean? Read on to discover the definition & meaning of the term Loss Development Factor - to help you better understand the language used in insurance policies.

Loss Development Factor

Loss Development Factor

Loss development factors are variables that are used for calculating the total amount of money that insurance companies will have to pay out in claims for a given period of time. They are needed because claims are often reported after a "loss development" period expires, meaning the amount of claims that have to be paid out is likely significantly higher than the current claims reported at the end of a loss development period such as a year.

We hope the you have a better understanding of the meaning of Loss Development Factor.

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