Underwriting

Burning Cost

Definition

Historical average loss cost used in pricing reinsurance, calculated by dividing losses in a layer by exposure or premium.

Practical Example

Burning cost of 5% for a working XoL layer based on 10-year history.

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Related Terms

Underwriting
Technical Price

Actuarially calculated reinsurance price based on expected losses, without consideration of market conditions or profit margins.

Underwriting
Experience Rating

Pricing method using the insured's or portfolio's historical loss experience to determine future premiums.

More in Underwriting

Loss RunRate on LineTechnical PriceExperience RatingExposure RatingSubject Premium
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