Which factors are most important in determining losses per claim (LPC)?

The determination of losses per claim (LPC) is primarily influenced by a variety of financial and operational factors that directly impact the cost of claims. In this case, focusing on DW losses, aged claims past 90 days, and write-offs provides a comprehensive view of the financial exposures that can result in escalating claim costs.

DW losses, or direct written losses, are critical because they represent the actual outflow of funds related to claims made by policyholders. Understanding these losses allows an organization to analyze patterns and potential areas of concern in their claims process.

Aged claims past 90 days serve as an important metric in assessing the efficiency of claims handling. Claims that have not been resolved within a 90-day timeframe may indicate underlying issues, such as complexities or disputes, which could lead to higher associated costs. The longer a claim remains open, the more likely it is that additional expenses will be incurred, thus impacting the LPC.

Write-offs also play a significant role in determining LPC since they represent financial losses that the organization cannot recover. High levels of write-offs can signal weaknesses in claims management, indicating potential inefficiencies and leading to increased per-claim costs.

Together, these factors contribute to a robust assessment of LPC, as they provide insight into both