Loss ratio calculator

To calculate the loss ratio, you need two pieces of information:

1. Incurred losses: This refers to the total amount of claims paid out by the insurance company over a specific period.

2. Earned premiums: This represents the total premiums collected by the insurance company during the same period.

The formula to calculate the loss ratio is as follows:

Loss Ratio = (Incurred Losses / Earned Premiums) * 100

Once you have the incurred losses and earned premiums values, simply divide the incurred losses by the earned premiums and multiply the result by 100 to get the loss ratio as a percentage.

In this example, the loss ratio is 40%, indicating that for every dollar of premium collected, the insurance company incurred 40 cents in losses.

Using a loss ratio calculator can help insurance companies evaluate their risk exposure, pricing strategies, and overall profitability.