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Exposure in residence

Harm of a progressive nature from a latent substance within the body even after active exposure has ceased. In asbestosis and similar contexts, it is the period during which the body incurs injury or disease as tissue reacts to the hazardous substance. See LONG-TAIL BUSINESS; MESOTHELIOMA.

Exposure Rating

See: Rating
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To estimate proportion of the loss for the underlying policy that is expected in the entire portfolio. The primary reason for going for this type of rating approach is the general lack of credible risk data of exposures, premiums and claims with the insurer or in the entire market. To circumvent this limitation on a logical and systematic basis, the rating approach tries to correlate and extrapolate the data of similar risks for arriving at the rate. Usually the insurer identifies the most important identifiable risk factors which can produce a loss and the premium rating is done by giving different weightages to each of the identified risk factor. Then a basic rate is arrived at by taking the premium rate for similar risks in other markets and each of the identified factor is superimposed on this basic rate by giving a discount or applying loading based on the nature of the risk factor being rates. It is used where there is no (or insufficient) representative claims experience available to calculate the burning cost.

Exposure theory

A theory that equates the time of ‘occurrence’ of a ‘long-tail’ injury, such as asbestosis, with the time of exposure to the cause of the injury for the purpose of a losses-occurring policy, the cause meaning harmful working conditions and/or exposure to harmful substances. All insurers on risk during this exposure period are deemed to be liable for the resultant liability in proportion to their time on risk. Alternative occurrence theories include the manifestation theory; the injury-in-fact theory; and the triple trigger theory.

Exposure to loss premium rating

Method of rating working cover excess of loss reinsurance treaties for property risks. The cedant’s portfolio is analysed according to sums insured in relation to the treaty deductible. Policies with sums insured below the deductible expose the reinsurer to no risk. A mathematical formula produces a rate of premium commensurate with the degree of exposure.

Exposure Unit

Unit of measurement used in insurance pricing.
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The number of exposure units used to determine the premium or pure premium for a policy or group of policies. Also, a unit such as a payroll, receipts, area, gate receipts, automobiles, etc. used to measure exposure.