Loss frequency

Two groups of cars can have the same annual repair bill, even though one had many small losses and the other had one large loss. Insurers assess how often losses occur separately from how much they cost.

Loss frequency is the number of losses per unit of insurance exposure over a chosen period. In motor insurance, that unit can be a car insured for a full year.

Put simply:

• Frequency tells you how often losses occur.
• Average loss size tells you how much one loss costs on average.
• Policy terms determine which damage is covered and how compensation is calculated.

Calculating frequency

In an illustrative example, 100 cars were insured for the entire year. There were 10 separate insured losses during that period. Frequency was 10 / 100 = 0.1 losses per car-year, or 10 losses per 100 cars insured for a year. These are fictional figures, not EUROASIA or Uzbekistan market statistics.

The observation periods must be comparable. Cars insured for only half a year should not count the same as cars covered for a full year. The actual duration of cover matters. A car-year is one car under insurance cover for a year.

Why frequency is not a personal forecast

The 10 losses in our example did not necessarily involve 10 different drivers: one car could have suffered several losses. Loss frequency and the proportion of cars with at least one loss are therefore different measures.

A group average does not mean that a particular driver will have an accident. Past observations help assess risk but do not predict an individual incident. Frequency also does not tell you how expensive a repair will be.

How drivers can use this distinction

When comparing insurance programmes, consider both recurring minor damage and rare major costs. Before buying, read the KASKO terms and check the specific cover against your chosen contract.

Frequency alone does not create a right to payment. Having no previous claims, for example, does not make ordinary wear an insured event if the contract excludes that cause of damage.

Checking the calculation and policy

• Which period the data covers and whether each car's insured duration is included.
• What was counted: reported claims, accepted insured losses or claims with payment. These totals can differ.
• Whether the cars being compared are similar and have the same covered risks.
• Whether restrictions apply to a single event or several events during the policy term.
• How the deductible applies: the part of a loss the insurer does not reimburse under the contract.

Do not confuse frequency with the payment amount or the ratio of claims payments to premiums collected. These measures have different numerators and calculation bases.

Steps after damage occurs

Record the circumstances, tell the insurer about the event and follow your contract's procedure. For incidents without a collision, see the guide to KASKO claims without an accident. A frequency calculation does not replace documents for an individual claim.

This term helps drivers compare programmes and understand loss statistics. The three stories below are fictional and use illustrative amounts: the outcome in a real situation depends on the policy terms.