Estimation of the industry total losses and of the percentage covered by this particular insurance company is called:

Question

Options

• Amarket share approach
• Badvance analysis approach
• Cspotlight analysis approach
• Dcourt judgment approach

• A
  83% (20)
• B
  8% (2)
• C
  4% (1)
• D
  4% (1)

Explanation

Market share approach (A) is correct because it describes exactly that process: estimating total industry-wide losses for a line of coverage, then applying the insurer's known market share percentage to estimate its own portion of those losses - a method commonly used in loss reserving and catastrophe modeling.

Advance analysis approach (B) is not a standard actuarial or insurance term for this concept. Spotlight analysis approach (C) similarly has no established meaning in insurance estimation methodology. Court judgment approach (D) refers to liability determinations made by courts, not a loss estimation technique.

Memory tip: Think of "market share" literally - the company is estimating its share of the total market's losses. If you remember that market share = your slice of the whole pie, you'll immediately connect it to the idea of scaling industry totals down to one insurer's portion.

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