Multiplicative coefficients giving the ratio between the premium for a high limit and the premium for a basic limit, the central pricing tool for liability lines where no insured value exists.
In property, insured value bounds the loss and makes an exposure curve possible. In liability there is no insured value: only the policy limit bounds the commitment, and nothing says what fraction of a maximum it represents. Increased limit factors answer by expressing the premium for a limit L as the basic limit premium times the ratio of mean losses capped at L and at the basic limit. The factor is therefore entirely determined by the severity distribution, and its growth is sublinear: moving from a 1M to a 10M EUR limit rarely multiplies premium by more than two, because the mass of claims stays below the first million. Three precautions govern their use. The distribution must be that of ground-up losses, not of already capped losses, on pain of circularity. The factors must incorporate defense costs, which do not scale like indemnity. And they age fast under judicial inflation, because that inflation moves mass into the tail and makes high factors grow faster than low ones.
General liability line, 2026 calibration, basic limit 1M EUR. Mean loss capped at 1M EUR: 14,200 EUR; at 5M EUR: 19,900 EUR; at 10M EUR: 22,100 EUR. The factors are therefore 1.00, 1.40 and 1.56. Judicial inflation adding eight points a year on losses above 1M EUR only, over three years, lifts the 10M EUR factor from 1.56 to 1.73, with no claim below one million having changed.
ILF, increased limit factor, facteur de limite, majoration de limite