Work out break even loss ratio instantly with clear inputs, formula shown and shareable results.
The break-even loss ratio is what is left of each premium unit after expenses and the target profit margin: 100% − expense ratio − profit target. Losses above it mean the target return is missed and rates need to rise.
Permissible loss ratio
Break-even LR = 1 - expense ratio - profit target
The indicated rate change is roughly current LR divided by break-even LR minus one, before considering trend and competition.
Yes. Long-tail lines earn income on reserves, so their permissible loss ratio can exceed the simple expense-based figure.