Claims Frequency Impact Calculator

Measure how claim counts change costs and pricing. Adjust trends, expenses, and reinsurance for scenario. Compare baseline results with updates using one clear chart.

Calculator Inputs

More options added: deductibles, limits, coinsurance, IBNR, taxes, credibility blending, and multi-year projections.
Example: USD, EUR, GBP, PKR.
Policy-years, account-months, vehicles, or other units.
Used to annualize exposures for comparisons.
Expected claims per 1,000 exposure units.
Scenario shift from baseline frequency.
Trend applied to frequency.
Average cost per claim before deductibles and limits.
Trend applied to severity.
Reduces average severity in a capped way.
Caps paid amount after deductible.
Loss adjustment expense factor on losses.
Reduces net losses by ceded share.
Insurer share = 100% − coinsurance.
Adds a reserve margin to expected loss.
Acquisition, admin, and operating expenses.
Target profit and risk margin.
Applied on top of indicated premium.
Shows rate need versus indicated gross premium.
Used only if enabled below and > 0.
Total loss amount matching observed claims.
Blends observed and baseline assumptions.
Requires observed claims and losses.
Subjective certainty in assumptions.
1.0 ≈ one standard deviation band.
Builds a multi-year scenario view.
Compounds exposure for projections.
If off, keeps year-one trends only.
Reset

Formula Used

These are simplified relationships for planning and sensitivity checks.

How to Use This Calculator

  1. Enter exposure units and period months to annualize.
  2. Set baseline frequency and severity, then apply scenario changes.
  3. Add contract features like deductible and per-claim limit.
  4. Include LAE, reinsurance, coinsurance, and IBNR for net loss.
  5. Add expenses, profit, and taxes to estimate indicated premium.
  6. Use projections to view impacts over multiple years.
If you enable observed experience, set credibility to control blending.

Example Data Table

Portfolio Exposure Frequency / 1,000 Severity Deductible LAE (%)
Auto – Standard 12,000 2.40 USD 1,350 USD 250 8
Home – Preferred 6,500 1.10 USD 3,950 USD 500 10
SME – Property 3,200 0.85 USD 6,800 USD 1,000 12
Use the example to sanity-check ranges before running scenarios.

Insights Article

Claims frequency as a loss cost driver

Frequency expresses claims per exposure, often per 1,000 units. This calculator estimates claims as (Exposure ÷ 1,000) × Frequency, then multiplies by net severity and modifiers. If severity and loadings are stable, a 10% frequency increase typically yields about a 10% loss increase.

Separating baseline, scenario change, and trend

Inputs distinguish baseline experience from a scenario shock and an underlying trend. For example, a +12% scenario change with a +3% trend gives 1.12 × 1.03 = 1.1536, or +15.36% versus baseline. This helps explain short-term events versus longer-run drift.

Severity shaping through retention and limits

Deductibles and per-claim limits reshape paid severity. The calculator uses a capped approach: net severity = max(Severity − Deductible, 0), capped by (Limit − Deductible) when a limit applies. This supports design comparisons where claim counts remain similar but payments per claim change.

Translating loss into indicated gross premium

Premium is derived with explicit loadings: Premium = Loss ÷ (1 − Expense% − Profit%). Taxes or fees are applied on top to show gross premium. If a current premium is entered, rate need is computed as (Indicated − Current) ÷ Current to quantify the adjustment required.

Using projections and sensitivity for decisions

The projection table grows exposures by your annual growth assumption and can compound trends each year. The sensitivity chart varies frequency change across a wide range to show how steeply losses and premium respond under your parameters, supporting governance and communication. Pair the sensitivity view with the loss band to discuss volatility, and use the projection path to test pricing resilience under different growth and trend assumptions over time with clear context for stakeholders.

FAQs

1) What does “frequency per 1,000” mean?

It is expected claims divided by exposure, scaled to 1,000 units. A frequency of 2.5 implies about 25 claims for 10,000 exposure units.

2) Why do losses scale with frequency?

Loss is approximately Claims × Net Severity × Modifiers. If severity and modifiers stay stable, changing claims changes total loss proportionally.

3) How does credibility blending work?

When enabled, observed frequency and severity are computed from observed claims and losses, then blended with baseline assumptions using the credibility percentage before applying scenario change and trend.

4) What is the uncertainty band?

It uses a Poisson-style approximation for claim-count variability. Lower expected claims produce wider bands; higher exposure produces tighter bands. Treat it as a planning indicator.

5) Why include deductible and per-claim limit?

Retention features alter paid severity. Including them helps compare programs where claim counts are similar but the insurer’s net cost per claim differs.

6) Is this suitable for formal filings?

Use it for scenario testing and communication. For filings, validate with your actuarial methods, segmentation, and documentation, and reconcile with audited experience.

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Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.