Allocated Loss Adjustment Expenses (ALAE)

Definition

Allocated loss adjustment expenses (ALAE) are attributed to the processing of a specific insurance claim. ALAE are part of an insurer's expense reserves. It is one of the largest expenses for which an insurer has to set aside funds (along with contingent commissions). Loss adjustment expenses that are assignable or allocable to specific claims. Fees paid to outside attorneys, experts, and investigators used to defend claims are examples of ALAE.

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