2018.Spring 11
Why is Salvage and subrogation not subtracted (accounted for) in calculation of Net loss and LAE ratio ?
I do not understand the statement "Schedule P data is presented net of paid (and possibly unpaid S&S) so S&S is not used in
the ratio calculation process" in the examiner's report.
Please explain
Comments
It's about avoiding double counting. If you were to subtract S&S again when calculating these ratios, you'd be mistakenly assuming that the reported losses and LAE figures are gross of S&S, leading to inaccurately inflated ratios.