Loss frequency = Total accidents / Total number of vehicles
= 50 / 1,000
= 0.05
hence, the correct option is b. 0.05
Loss frequency is how regularly losses will arise. Loss frequency is used to predict the likelihood of similar losses happening in destiny. An example is loss frequency for water damage in case your commercial enterprise is located on a flood simple is probable high.
Loss Frequency = total amount of Losses divided by means of the general variety of accidents • Loss Severity = total variety of accidents divided by total devices Analyzed. common Loss = average Loss Frequency X common Loss Severity.
Frequency refers back to the number of claims an insurer anticipates will occur over a given period of time. Severity refers to the charges of a claim—a high-severity declaration is greater steeply-priced than a mean claim, and a low-severity claim is less costly.
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