Also known as: claims frequency · loss frequency · frequency and severity · frequency vs severity
How often claims happen, measured as the number of claims per unit of exposure over a set period, usually a year.
Claim frequency is a count, not a cost. It divides the number of claims by a unit of exposure, such as per 100 employees, per $1M of revenue or payroll, or per vehicle-year, so insurers can compare a 10-person startup with a 500-person company on the same basis. Frequency is the first half of how your premium is built: multiplied by claim severity, it produces the expected loss cost per exposure unit that underwriters price from. High frequency with low severity reads as a process problem and is often fixable; underwriters treat it as a signal about how you operate, which is why several small claims can hurt a renewal more than one large one.
Divide the number of claims in a period by a unit of exposure, then scale it to a readable number. If you had 3 claims across 150 employees in a year, that is 0.02 claims per employee, usually expressed as 2 claims per 100 employees. The exposure base varies by line: payroll or headcount for workers' comp, revenue for liability, vehicle-years for auto.
Frequency is how often claims occur; severity is how much each one costs. Frequency is a count per unit of exposure, severity is an average dollar figure. Multiply them and you get loss cost, the expected loss per exposure unit that sits underneath your premium.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
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