Loss Development Factors

Tutorial

From the Loss Development Factors Menu Page, you can select to view either the LDFs by Line of Coverage or the Workers Compensation LDFs by State.

System LDFs video

The purpose of these pages are to display the system-default Loss Development Factors (LDFs) used in Loss Forecaster to develop losses to an ultimate level. The ultimate cost of claims for a specific time period is usually not known until several years after the close of that period. Therefore, loss development factors are used to project the additional cost expected on claims associated with each loss period. These factors quantify the late developing aspects of certain losses, such as claims involving medical complications not recognized in the early stages of treatment or verdict values for litigated claims which are different than the amount which was reserved to pay the claims. LDFs also account for losses that occurred during the policy period, but are not reported until a later date. These losses are commonly referred to as incurred but not reported losses, or IBNRs.

You can enter your own LDFs for an analysis by clicking the 'Click to use user-supplied LDFs' button on the LDFs page of the analysis (NOT the system LDFs page) and overtyping the calculated LDFs with your own values. If you later return to this screen or previous screens, you will be reminded that system LDFs differ from your user-defined LDFs. If desired, you can click on the ‘Click to use system-supplied LDFs’ button to override the LDFs that you previously input.

Videos

System LDFs

FAQs

What is the source of the LDFs (loss development factors) and other trending data in Loss Forecaster? Are they specific to the selected industry?

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