Table giving the percentage of premium corresponding to cover limited to a fraction of insured value, the tabulated ancestor of the exposure curve and still in use in several markets.
A policyholder covering only the first 10% of a plant's value does not pay 10% of the full premium, it pays far more, because that first slice concentrates most of the frequency. The first loss scale quantifies that relationship and returns a percentage of premium per percentage of value covered. It is the same information an exposure curve carries, presented as a table and read in the other direction: the exposure curve serves a reinsurer pricing a high layer, the first loss scale serves a direct insurer pricing a low limit. The best known historical tables are those published by Ruth Salzmann in 1960 from US homeowners losses, and the German and Swiss tables used in industrial property. Their limit is structural: a table calibrated thirty years ago ignores rebuilding cost inflation and value concentration, and reading it today without recalibration amounts to pricing with another era's loss experience.
Ruth Salzmann published her homeowners loss distribution tables in 1960, and they served as a market reference in the United States for several decades. On a European industrial table calibrated in 2024, cover limited to 10% of insured value consumes 62% of the full premium, and cover limited to 25% consumes 84%: the remaining three quarters of value carry only 16% of the rate.
first loss scale, échelle de premier risque, table de Salzmann, first loss table