Loss constant

{
  "id": "MLC-T-INS-002062",
  "term": "Loss constant",
  "field": "Insurance and risk management",
  "definition": "A flat charge added to the premium for smaller workers' compensation policies to account for the higher-than-average loss frequency observed in this group. This charge addresses the statistical finding that small businesses tend to have a greater number of claims relative to their premium size. Unlike the expense constant, which covers administrative costs, the loss constant is a component of the pure premium intended to fund claim payments.",
  "subject": "Workers Compensation",
  "url": "https://mlchart.com/terminology/insurance/loss-constant/"
}