Loss Ratio

Plain English Definition: Loss ratio is the percentage of insurance premiums paid out in claims.

What Loss Ratio really means for someone with an insurance policy

Insurers use loss ratios to evaluate the profitability of their policies by comparing claims paid to premiums collected.

Loss Ratio Real World Examples

• An insurer with a high loss ratio may raise premium rates.
• A company with a low loss ratio is more profitable.
• Claims paid during a natural disaster raise the insurer’s loss ratio.