The self-insurer's 'expected level' is commonly referred to as the undiscounted ________ ________ _____________.

• A. Loss Reserve
• B. Premium Rate
• C. Actuarial Central Estimate
• D. Policy Limit

Answer: (C)

In self-insurance planning, the undiscounted expected level of future claim costs is captured by the actuarial central estimate. This is the best estimate of all future losses, calculated on an aggregate basis from current data, and expressed without applying any discount for the time value of money. It represents the mean expected ultimate cost to the self-insurer.

The actuarial central estimate is used as the funding baseline because it reflects the most likely total cost, rather than a guaranteed minimum or a maximum payable. It’s distinct from a loss reserve, which is the amount set aside on the books specifically to cover recognized and incurred-but-not-reported claims; it’s also not related to premium rates, which determine what premium is charged, or to policy limits, which cap the amount payable per claim.