A loss ratio relates defined claims costs to a defined premium measure for a reporting period.
The distinction that matters
Incurred and paid claims, earned and written premium, and gross and net figures are different bases.
What to check
- Read the formula used.
- Check reinsurance treatment.
- Consider portfolio mix and period.
Example to discuss
A reader does not compare a paid-claims ratio with an incurred-claims ratio without adjusting for the different definitions.
This is a hypothetical comparison, not a customer claim or a determination of cover.
Jurisdiction and scope
Use the definition in the report being analysed. Changes in business mix, reinsurance, estimation and reporting methods can affect interpretation. These measures do not determine whether an individual claim is covered.
Sources and further reading
General information only. The policy, schedule and applicable rules determine the actual position. For a personal decision, use an appropriately qualified adviser or the relevant provider.