In considering the maximum loss that they may incur Insurers will take into account both the good features of a risk and the bad. What factors effect Estimated Maximum Loss ?
It is an estimate of the maximum probable loss that can develop from an Insured peril – generally speaking the perils involved will be those relating to material damage of a property or the consequential loss that follows.Īn alternative term commonly used is Probable Maximum Loss. How do Insurers use Estimated Maximum Loss to control their business ?Īs its name would suggest this is an estimate only based on experience, there is no exact formula that Insurers use to arrive at this figure.What factors effect Estimated Maximum Loss ?.What does Estimated Maximum Loss mean ?.Today we will be looking at Estimated Maximum Loss as follows: As part of our ongoing insurance glossary series we continue to explore the terminology and practices used in the Insurance world.