How to book loss adjustment expenses
Recording expenses incurred during the investigation and settlement of claims, such as legal fees or independent adjuster costs.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Loss Adjustment Expense (LAE) | Expense | 1,200.00 | - |
| Accounts Payable - Vendors | Liability | - | 1,200.00 |
💡 Accountant's Note
MGAs with claims-handling authority must track LAE separately from the actual claim indemnity payment to analyze total cost of risk and operational efficiency.
Practitioner & Systems Framework
💻 ERP Architecture
Associated with specific claim files in the claims management system for per-loss tracking.
⚠️ Audit Flags
High ratio of LAE to total claims paid which might suggest inefficient claims management.
📄 Required Documentation
Adjuster invoices, legal fee breakdowns, and allocated loss adjustment expense (ALAE) agreements.
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Discussion & Community Questions
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