loss ratio

n. The ratio between the premiums paid to an insurance company and the claims settled by the company.

loss ratio

n (Insurance) the ratio of the annual losses sustained to the premiums received by an insurance company

loss′ ra`tio

n. the ratio of the losses paid by an insurer to premiums earned for a given period. [1925–30]

Thesaurus

Noun

loss ratio - the ratio of the annual claims paid by an insurance company to the premiums receivedratio - the relative magnitudes of two quantities (usually expressed as a quotient)

Loss ratio

The ratio of losses paid or accrued by an issurer to premiums collected over a year.

Loss Ratio

In insurance, the ratio of what an insurance company pays in benefits and associated expenses (such as adjustments) to what is collected in premiums, expressed as a percentage. It is calculated thusly:

Loss ratio = (Benefits paid out + Adjustment expenses) / Premiums collected

For example, if a company pays out $8,000,000 in benefits and adjustment and collects $10,000,000 in premiums, its loss ratio is 80%. Traditionally, the loss ratio has been used as a gauge for both an insurance company's financial health and whether it was overcharging policy holders. For example, a high loss ratio indicated that the company was not making a reasonable profit, while a low ratio showed that it was either charging too much or covering too little. However, this view has been criticized, at least in relation to health insurance, on the grounds that the integration of insurers and providers makes it difficult or impossible to calculate the ratio properly.

loss ratio

loss ratio

loss ratio

loss′ ra`tio

Loss ratio

Loss ratio

Loss Ratio

loss ratio

Words related to loss ratio

noun the ratio of the annual claims paid by an insurance company to the premiums received

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