[Basic Premium + (Incurred Losses * Loss Conversion Factors) ] * Tax Multiplier

May 23, 2005

Retro Premium =

Basic Premium includes insurer acquisition costs, insurer operating expenses and an allowance for profit for the insurer. Loss Conversion Factor is a claims handling fee included for the administrative cost the carrier assumes when handling the claims. The Loss Conversion Factor is usually a percentage of losses, normally 10 percent to 15 percent. Tax Multiplier reflects state premium taxes, licenses, fees and miscellaneous assessments that the insurer must pay on the premium it collects.

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Insurance Journal Magazine May 23, 2005
May 23, 2005
Insurance Journal Magazine

2005 Program Directory, Vol. I