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Insurance

Loss costs

Insurance rates are composed of two main parts: the portion that covers claims and the costs of adjusting those claims. To determine these rates, insurance companies forecast their future loss costs and include a provision for expenses, profit, and unforeseen events. This approach helps them manage risk and ensure their financial stability. As a knowledgeable professor in finance, I encourage you to understand the components of insurance rates to make informed decisions about your insurance needs.
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