june 2008 mac

charliemansfield Registered Posts: 19 Dedicated contributor ? ? ?

Task 2.3

How do you calculate the loss adjuster cost (fee) varience when you have a range of figures?

The answer is £10000 adverse, but i have no idea how to arrive at this figure.

Does anyone have any suggestions?




  • sdv
    sdv Registered Posts: 585
    Loss adjuster costs

    budgeted costs are £250,000 for 2500 claims. (£100 per claim)

    actual costs are £210,000 for 2000 claims

    if you flex the budget at 2000 claims then the budgeted costs will be 2000 x £100 = £200,000

    actual costs - budgted costs = varience

    210,000 - 200,000 = £10,000 Adverse
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    I've added an explanation of the variance from my answer at the time.
    This is unusual as far as the MAC variance questions go as it looks at the total cost variance, as there is not enough information to produce sub-variances for efficiency or rate.

    Loss adjuster cost (fee) variance
    The standard loss adjuster cost per claim is £100. This does not recognise
    the different cost based on the size of the claim. In May the mix of claims
    included more than half that were for over £5,000. As the largest claims take
    the longest time for the loss adjuster, this may explain some or all of the
    £10,000 adverse variance.
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