Indexation
Adjustment of a past value to current price levels by applying a reference index, to make historical data comparable.
A construction claim paid at 200,000 EUR in 2018 enters a 2024 burning cost at 252,000 EUR if the building index moves from 100 to 126. Indexation thus restates a past value (historical loss, premium, coverage limit) at current price levels through an index ratio: indexed value = historical value × (target index / origin index). In pricing, it makes the burning cost representative of current costs. The index follows the nature of the claim: consumer prices, construction cost (in France, the FFB index or the BT01 index published by INSEE), medical costs, or a line-specific index. Indexation corrects severity only. A frequency drift is measured separately, otherwise it gets wrongly attributed to cost inflation.
Construction claim paid in 2018: 200,000 EUR. BT01 construction index 2018 = 100; 2024 = 126. Indexed value = 200,000 × 126/100 = 252,000 EUR for burning cost.
indexation, index linking, stability clause, claims indexation
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