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Average Daily Attendance. Student headcount in K-12 school districts. Used as a measure of exposure to liability losses.


An amount of funds set aside by a self-insurer to pay claims should losses turn out to be higher than their actuarial expected value.

California Association of Joint Powers Authorities.

California Association of School Business Officials.

Case Reserves
Estimates of the remaining cost to settle specific claims currently being managed by claims administrators. Case reserve estimates are updated whenever new information about a claim becomes available.

Claim Severity

The average dollar amount of loss per loss occurrence. This is usually an estimate of the final average cost once all claims are settled.

Confidence Level
The estimated probability that a given dollar amount will cover a specific group of open or unreported claims. For example, the amount that we designate as our 90% confidence level estimate of a claims liability has an estimated 90% probability of being adequate to pay that liability. We recommend that a self-insurer fund each year's claims at the 70% or higher confidence level. Ideally, capital should be sufficient to fund the self-insurer's total liability at the 90% confidence level.


Employment Practices Liability. Refers to claims filed by an employee or ex-employee against an employer, usually alleging unfair termination, failure to promote, or on-the-job discrimination or harrassment.

Excess Insurance

Excess Insurers provide this commercial coverage to self-insurers. The excess insurer pays the portion of a loss that exceeds the self-insurer's SIR. Various Joint Powers Authorities also provide excess coverage.

Expected Value

The actuary's "best" estimate of the losses or rate of loss on a given set of claims or a given exposure. The expected value of a liability is the number that the accountants use when they prepare financial statements. Self-insurers often compare the expected value estimate with various confidence level estimates of the same losses. For most casualty insurance, the expected value corresponds roughly to the 50% to 60% confidence level.


Full Time Equivalent Student. Student headcount used as a measure of exposure to liability losses for community colleges

Stands for "Incurred but not Reported." There are two types of IBNR: (1) Broad IBNR and (2) Pure IBNR. Pure IBNR represents losses that have already occurred but have not yet been reported as claims. Broad IBNR equals pure IBNR plus expected increases on the case reserves for known claims. For workers' compensation, most IBNR is expected future case reserve development.


Joint Powers Authority. In California, a public entity formed by a group of other public entities. We work with JPA's formed to provide their members with coverage against property, liability, and workers' compensation losses.


Kindergarten through 12th grade.

Law of Large Numbers

From the theory of statistics. The law says that the larger the statistical sample, the closer the sample average is likely to be to the true average. What this means for self-insurers and actuaries is that the actuarial estimates of large self-insurers are likely to be more accurate, ceteris paribus. There is a connection with Confidence Levels. A large self-insurer needs relatively less capital than a small self-insurer.

Loss Development

The main reason that the world needs casualty actuaries. Self-insurers must account for the losses they incur in the year in which the losses were incurred. However, it often takes many years for all the losses incurred in any given year to settle. In the interim some claims close, some case reserve estimates change, and some previously unknown losses become known. Actuaries estimate future reserve changes and future cIaim reports as IBNR. 

Public Agency Risk Managers Association.

Public Risk Management Association.

Risk and Insurance Management Society, Inc.


Self-Insured Retention. Self-insurers pay all claims that are smaller than their SIR. For claims that exceed the SIR, the self-insurer pays the amount of the SIR and the excess insurer pays the rest of the claim. 

Tail Factor

Has to do with loss development. A self-insurer might have a loss record that goes back ten years that the actuary can use to project loss development ten years into the future. However in some cases, particularly with workers' compensation, we know that losses will continue to develop for more than forty years. The tail factor is an actuarial parameter obtained from an external source that fills in for the missing self-insurer data.

Total Insured Value. Value of insured property for insurance purposes. Property self-insurers use TIV as a measure of potential exposure to loss.

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