The rating method known as Loss Costs includes which of the following?

The rating method known as Loss Costs specifically focuses on the fundamental components of an insurance premium calculation, particularly the underlying costs of claims that an insurer expects to pay. This method typically includes losses incurred due to claims as well as loss adjusting expenses, which are the costs associated with investigating and settling claims.

Losses represent the actual amounts paid out to policyholders for covered claims, while loss adjusting expenses encompass the necessary expenditures incurred to handle and process those claims effectively, such as fees paid to adjusters or other professionals involved in the claims process. By incorporating both losses and loss adjusting expenses, this method provides a comprehensive view of the probable costs that insurer will face and helps to establish a more accurate rate that reflects the true risk associated with coverage.

The other options neglect essential components that are part of the overall cost structure considered in the Loss Costs rating method. For instance, only considering losses or including overhead expenses or profit margins does not provide the complete picture that includes the intricacies of claim handling and processing costs that are captured under loss adjusting expenses.