Tools

Total cost of risk (TCOR) calculator

Adds premiums, retained losses, fees, collateral, risk control and staff time into one annual cost of risk, and compares a current program with a proposed one.

Runs entirely in your browser: nothing you enter is sent or stored by this site. Results are estimates for planning, not a quote or advice.

Premiums are the part of your risk bill you can see. Total cost of risk (TCOR) adds the parts you do not: the losses you pay yourself, claims administration, fees, collateral, safety spending and the staff time that goes into all of it. This tool builds that total for your current program and, if you like, for a proposed one.

How to use it

Every item has a Current column and an optional Proposed column. Use the same 12-month period for each item.

  • Premiums by line. General liability, property, commercial auto, workers' comp, umbrella and excess, professional/D&O/EPLI/cyber, and other lines. Take them from invoices or declarations pages, with taxes and fees that are billed on them.
  • Retained losses. Deductibles and uninsured claims you paid, from your loss runs and general ledger.
  • Claims administration and TPA fees, and broker fees paid separately from premium.
  • Risk control and safety spending, such as inspections, training and safety equipment.
  • Collateral and letter of credit fee. The amount you have posted and the yearly fee as a percentage.
  • Taxes, fees and assessments not already in premiums, internal staff time on risk and insurance, and annual revenue.

The math

TCOR = premiums + retained losses + claims administration + broker fees + risk control + taxes and fees + staff time + collateral cost. Collateral cost is the collateral amount times the letter of credit fee percentage, not the collateral itself. Revenue is not added to the total. It is used for two ratios: TCOR ÷ revenue, and TCOR ÷ revenue × 1,000.

A hypothetical example with the opening numbers: premiums of $304,000, retained losses of $45,000, risk control of $15,000, taxes and fees of $4,000 and staff time of $20,000 give a TCOR of $388,000. On $25 million of revenue that is 1.55%, or $15.52 per $1,000. Premiums are 78% of the total.

In the Proposed column, a blank cell is treated as unchanged from Current. Suppose a proposal lowers premiums by $60,000 and you enter retained losses $35,000 higher. The tool shows TCOR $25,000 lower, and a verdict line says so.

Assumptions and limits

  • Retained losses are your figure. One quiet year can make a high deductible look cheap, so test a bad year with the deductible and retention break-even calculator.
  • Collateral is counted only at the fee you enter. If you post cash, any cost of tying up that cash is yours to estimate and enter as a percentage.
  • The tool does not include uninsured business interruption, lost customers, reputation, or the value of capital at risk.
  • It does not discount or project. It takes one period at face value, and losses valued at different ages (12 months against 36 months) are not comparable.
  • It does not test whether a proposed program is adequate: limits, exclusions and insurer strength are separate questions for your broker.
  • A lower TCOR is not automatically the better program. It shows cost, not protection.

The method is explained in Total cost of risk (TCOR): what it includes and how to calculate it. For the retention choices behind many TCOR changes, read risk transfer vs retention: avoid, reduce, transfer or retain and deductibles vs self-insured retentions: who pays first. Larger employers can see how a risk manager builds the picture in what a risk manager does, and when a business needs one. The glossary defines total cost of risk and retention.

Last reviewed October 10, 2026

Related guides

Total cost of risk (TCOR): what it includes and how to calculate it Total cost of risk adds premiums, retained losses, fees, safety spending and staff time into one yearly figure. The formula, a worked comparison and pitfalls. Risk transfer vs retention: avoid, reduce, transfer or retain Every risk gets one of four responses: avoid, reduce, transfer or retain. How to choose using severity and capacity, with a worked deductible example. Deductibles vs self-insured retentions: who pays first A deductible is billed back after the insurer pays; a self-insured retention is paid by you first. How each affects claim control, limits and credit risk. What a risk manager does, and when a business needs one What a risk manager does: find exposures, decide what to keep or insure, run the insurance program and claims, and when a business should hire one. Enterprise risk management (ERM) explained What enterprise risk management is, how COSO's 2017 framework and ISO 31000 define it, how risk appetite works, and how an ERM program changes insurance buying.

Terms used here

Total cost of risk (TCOR) The full annual cost of carrying risk: insurance premiums, losses you retain, and loss-control and administrative spending, often shown as a share of revenue. Retention The share of a loss a business pays itself, through a deductible, self-insured retention or captive, before insurance responds. Deductible The amount of a covered loss the policyholder bears before the insurer pays, set in the policy and subtracted from the loss. Loss control The inspections, safety programs and physical improvements that a business and its insurer use to make claims less frequent and less severe.

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