Loss Ratio: Difference between revisions
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PaulWaring (talk | contribs) Created page with "The Loss Ratio for a policy or group of policies is the percentage of claim payments based on the premium charged. Loss ratios may calculated against the gross or net premium, and on a written or earned basis." |
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The Loss Ratio for a policy or group of policies is the percentage of claim payments based on the premium charged. | The Loss Ratio for a policy or group of policies is the percentage of claim payments based on the premium charged. For example, if the premium was £1000 and £600 of claims had been paid, the loss ratio would be 60%. | ||
Loss ratios may calculated against the gross or net premium, and on a written or earned basis. | Loss ratios may calculated against the gross or net premium, and on a written or earned basis. | ||
As loss ratios only take into account claim payments, they do not allow for commissions, insurer costs etc. Therefore a loss ratio must be significantly below 100% for an insurer to make an underwriting profit. | |||
Revision as of 11:12, 23 April 2025
The Loss Ratio for a policy or group of policies is the percentage of claim payments based on the premium charged. For example, if the premium was £1000 and £600 of claims had been paid, the loss ratio would be 60%.
Loss ratios may calculated against the gross or net premium, and on a written or earned basis.
As loss ratios only take into account claim payments, they do not allow for commissions, insurer costs etc. Therefore a loss ratio must be significantly below 100% for an insurer to make an underwriting profit.