What is loss frequency in the context of insurance?

Loss frequency refers specifically to the number of claims that occur within a defined period. It is an important metric in the insurance industry as it helps insurers assess the risk associated with a particular policy or insured group. By analyzing loss frequency, insurers can determine patterns in claims and adjust their underwriting practices, premiums, and reserves accordingly.

Understanding loss frequency is crucial for assessing how often insured events occur, which in turn influences the overall cost of providing insurance coverage. When insurers notice a high frequency of claims within a specific timeframe, this may indicate a heightened risk factor that needs to be addressed, potentially leading to rate adjustments or changes in coverage terms.

The other options address different aspects of claims handling. Total dollar amount of claims relates to loss severity, average payout per claim provides insight into the cost per incident, and denied claims gives information about the claims process and policyholder satisfaction. Each of these metrics plays a role in the overall understanding of an insurance portfolio but does not specifically define loss frequency.