Burning Costs
Burning Cost is a calculation method used in insurance to calculate the premium taking into account previous claims. The term is used in the case of reinsurance. The insurance company arrive at the burning cost by calculating the cost of actual claims for a specific risk exposure, over a number of years and then state this as the rate per unit exposure.
The benefit of using burning cost in calculating premium is that it makes use of actual statistical data for similar risk exposure, therefore it is a more accurate method to use.