Campbell's formula

Campbell’s formula is a method used in actuarial science to estimate the variability (standard deviation) of an insurance company's total claims or losses over a specific period. It breaks down the total risk into two parts: the number of claims (frequency) and the size of each claim (severity). By understanding the average number of claims and their typical size, along with how much these can vary, the formula helps actuaries assess how much the total loss might fluctuate, aiding in risk management and setting appropriate premiums.