Allocated loss adjustment expenses (ALAE) are costs attributed to the processing of a specific insurance claim. ALAE is 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.

What are ALAE reserves?

ALAE Reserves means reserves (including IBNR) for Allocated Loss Adjustment Expenses of the Company and the Subsidiaries, net of collectible Ceded Reinsurance, calculated and presented on a basis consistent with SAP and generally accepted actuarial principles.

What is the difference between ULAE and ALAE?

ULAE are unallocated loss adjustment expenses which are not claim-file specific but are calculated en mass, usually for a line of insurance. ALAE are allocated loss adjustment expenses. Here the expenses associated with a particular claim are allocated to that claim.