Portion of the total premium needs to pay expected losses and loss adjustment expenses, with no allowance for the Insurer’s expenses or profit. Pure Premium = Actual Loss + Loss Adjustment Expenses
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MEDICAL,USA,REFERENCE: See: pure premium rating method.
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The fraction of the premium payment that is used pay the probable losses.
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The pure risk premium is the product of claim frequency and claim severity per unit of exposure. Hence, pure premium can be calculated as follows… Pure Premium = Actual Loss + Loss Adjustment Expense