trend factor

A trend factor is applied to the latest year of historical experience to reflect changes in insurance costs and usage that are expected to take place between that year and the year during which rates will be in effect. Insurance costs fall into two broad categories, each which may experience different trends:

1. Costs associated with policyholder claims: medical and vehicle damage losses, lost wages, damages to property, legal costs and
2. expenses incurred by companies in the ordinary course of business: wages, rents, costs of new technology.