Average severity

{
  "id": "MLC-T-INS-000507",
  "term": "Average severity",
  "field": "Insurance and risk management",
  "definition": "A measure of the average financial cost of a single paid claim, used by insurers to analyze loss trends and forecast future liabilities. It is calculated by dividing the total value of incurred losses by the number of claims for a specific line of business or time period. An increasing average severity indicates that the cost to settle individual claims is rising, which can influence future premium calculations and reserving practices.",
  "url": "https://mlchart.com/terminology/insurance/average-severity/"
}