Some Definitions
| Event Losses |
A table of all simulated events, with estimates of portfolio loss
amounts, descriptive code for the event, and the annual rate of the
event recurring. Usually sorted by loss amount. |
| Cumulative Rate |
Annual loss rate for an event, and all larger events, which is
approximately equal to: |
| Exceeding Probability |
Annual probability of a loss equal, to or exceeding, a given amount. |
| Critical Probability |
Annual E.P. equating to a loss amount, more commonly expressed as: |
| Return Time |
Period (in years) = 1 / Annual E.P. This does not have an easy
interpretation as a probability. Don’t try! |
Event Loss Table
Totaling (Event Loss x Rate) =
Average Annual Loss
Gross Average Annual Loss
Hurricane Example
Wind Exposure
Personal + Commercial - All Coverages
Hurricane Exposure
Average Annual Loss
Hurricane Exposure
Ratio
Ranking Event Losses, and then Cumulating Rates =
Critical Probabilities
EP Results
Gross Insured Loss Estimates
(Sample)
Gross Insured Loss Estimates
(Ratio Scale)
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