The actual or expected cost that an insurer would incur as indemnity payments and allocated loss adjustment expenses (or the so-called defense and cost containment expense). It is the monetary amounts an insurer must pay to cover claims, in addition to the costs to process and investigate any arising claims. This measure of premium does not include overhead costs (incurred by an insurer) or any profit loadings.
Pure cost is an input into the calculation of insurance premiums, reflecting only the basic costs.
A pure cost is also known as loss costs or pure premium.
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