The computation and use of an LER is illustrated in the next three
examples; the first concerns a retention (deductible), the second a limit
(maximum), and the third the value of a “layer”. In Chapter 5 we learn
how to handle these situations more formally and with fitted distributions,
using notation from mathematical statistics, but for the present we use the
simple data set involving the following 10 losses (in $10,000 units) by 10
insureds of a certain insurer: