A statistical method of estimating outstanding claims, whereby the weighted average of past claim development is projected into the future. The projection is based on the ratios of cumulative past claims, usually paid or incurred, for successive years of development. It requires the earliest year of origin to be fully run-off or at least that the final outcome of that year can be estimated with confidence. It appropriate, the method can be applied to past claims data that have been explicitly adjusted for past inflation.

A legal doctrine that makes the Insurer responsible for losses caused by perils covered under the contract and other perils that the covered perils may set in motion. For example, a Fire Policy covers Fire, smoke and water damage caused by a Fire.

The probability or likelihood that one event will occur.

The long run relative frequency of a loss, and is best expressed as the probable number and severity of losses out of a given amount of exposures, using the probable number of losses times its average severity as the numerator and the total value exposed to loss as the denominator when expressed as a fraction.