Health · Chapter 19 · Premium Calculation
Expenses (Loading)
Definition
The expense factor — also called the load, loading charge, or loading factor — built into premiums to cover what the insurer pays out to operate: agent commissions, employee wages, administrative costs, overhead (e.g., rent), and the regulatory requirement to set aside reserves for future claims. Insurers also build in a percentage for profit — which MUTUAL companies call "surplus."
In plain English
The overhead markup added on top of expected claims.
Exam tip
Stock company builds in "profit"; a mutual calls the same thing "surplus."
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms