Estimated maximum loss (EML)

Category: Pricing & rating · Reviewed by Simon Temme, Account Executive · Last reviewed

Estimated maximum loss (EML)

Estimated maximum loss (EML) is the largest loss expected at a single risk under normal operating conditions, assuming that loss-mitigation systems function as designed. It is typically the smallest of the EML / PML / MFL family.

Worked example

Same warehouse as the MFL article:

• EML (sprinklers, compartmentation and detection function as designed): ~£15m.
• A single fire is brought under control in one compartment with sprinkler operation. BI period limited to repair time.

Use

• Day-to-day underwriting basis for capacity.
• Treaty pricing and accumulation control.
• Property surveyor risk assessment and risk-improvement reporting.

References

• LPC / FPA guidance.
• Swiss Re Property Insurance.

Cross-references

• Probable maximum loss
• Maximum foreseeable loss
• MFL
• PML

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