Risk & Underwriting
Loss Ratio
Definition
The ratio of claims paid by an insurance company to premiums earned, expressed as a percentage. A loss ratio above 100% indicates the insurer is paying out more in claims than it collects in premiums.
In Zach’s Words
“Loss ratio is how insurance companies keep score. If a carrier collects $100 in premiums and pays out $60 in claims, that's a 60% loss ratio. When loss ratios get too high (bad weather years, lots of claims), carriers raise rates. It's the number-one reason your premium goes up even when YOU haven't filed a claim.”
— Zach Nadler, CIO