Claims department costs not chargeable to an individual file: handler salaries, premises, IT systems.
Unallocated loss adjustment expenses (ULAE) cover the operating costs of the claims function not attributable to a specific file: handler salaries and social charges, departmental overhead (premises, IT, management). Their estimation is actuarial: they are typically reserved as a percentage of gross claims reserves using methods such as the Kittel method. In international comparisons, verify whether published ratios include ULAE within expenses or losses, as this shifts both the expense ratio and loss ratio by several points.
Claims department of 20 staff, annual cost 1,800,000 EUR = ULAE ≈ 8% of portfolio gross incurred losses.
unallocated LAE, frais non alloués, overhead sinistres, claims department overhead