Confidence Level

Statistical measure of the number of times out of 100 that test results can be expected to be within a specified range. For example, a confidence level of 95% means that the result of an action will probably meet expectations 95% of the time. Most analyses of variance or correlation are described in terms of some level of confidence. See also chi-square test.

Percentage of confidence in a finding. For example, if an insurance company's total Loss Reserves should be $10,000,000 in order to attain an 80% confidence level that enough money will be available to pay anticipated claims, then, in 8 times out of 10, after all claims have been settled the total claims paid out will be less than $10,000,000. Conversely, in 2 times out of 10 the total claims paid out will be greater than $10,000,000. In another example, a 70% confidence level of one's house burning would mean that the house would burn approximately once every 3.33 years [1 _ (1-0.70) = 3.33].