What Is Loss Aversion? Loss aversion in behavioral economics refers to a phenomenon where a real or potential loss is perceived by individuals as psychologically or emotionally more severe than an equivalent gain. For instance, the pain of losing $100 is often far greater than the joy gained in finding the same amount. The psychological
What Is a Loss Ratio? Loss ratio is used in the insurance industry, representing the ratio of losses to premiums earned. Losses in loss ratios include paid insurance claims and adjustment expenses. The loss ratio formula is insurance claims paid plus adjustment expenses divided by total earned premiums. For example, if a company pays $80
What Is a Loss Reserve? A loss reserve is an estimate of an insurer’s liability from future claims it will have to pay out on. Typically composed of liquid assets, loss reserves allow an insurer to cover claims made against insurance policies that it underwrites. Estimating liabilities can be a complex undertaking. Insurers must take into
What is Loss Settlement Amount? Loss settlement amount is a term used to denote the amount of a property insurance settlement, whether real estate or personal property. The loss settlement amount largely depends on which type of loss cost settlement option a policyholder has agreed to in their homeowner’s insurance policy. How Loss Settlement Amount Works The loss settlement
What Is a Lost Policy Release (LPR)? A lost policy release (LPR) is a statement releasing an insurance company from its liabilities. An LPR is signed by the insured party and signifies that the policy in question has been lost or destroyed or is being retained. Historically, an insured party that wanted to cancel an insurance policy
What Are Longevity Derivatives? Longevity derivatives are a class of securities that provide a hedge for parties exposed to longevity risks through their businesses, such as pension plan managers and insurers. These derivatives are designed to deliver increasingly high payouts as a selected population group lives longer than originally expected or calculated. Key Takeaways Longevity derivatives
What Is a Long Hedge? A long hedge refers to a futures position that is entered into for the purpose of price stability on a purchase. Long hedges are often used by manufacturers and processors to remove price volatility from the purchase of required inputs. These input-dependent companies know they will require materials several times
What Is the Low-Income Housing Tax Credit (LIHTC)? The Low-Income Housing Tax Credit (LIHTC) is a tax incentive for housing developers to construct, purchase, or renovate housing for low-income individuals and families. The Low-Income Housing Tax Credit was written into the Tax Reform Act of 1986. There are specific qualifications residents must fulfill to benefit from these
What Is the Long-Legged Doji? The long-legged doji is a candlestick that consists of long upper and lower shadows and has approximately the same opening and closing price, resulting in a small real body. Key Takeaways The long-legged doji is a candlestick that consists of long upper and lower shadows and has approximately the same opening and
What Is Long Market Value? The long market value is the aggregate value, in dollars, of a group of securities held in a cash account or margin account at a broker. Long market value is calculated using the prior trading day’s closing prices of each security in the account, though in a liquid market, current
