Insurance Loss Ratio (Safety) Calculator

Work out insurance loss ratio (safety) instantly with clear inputs, formula shown and shareable results.

About Insurance Loss Ratio (Safety) Calculator

Loss ratio is incurred losses, claims paid plus reserves for open claims, divided by premiums earned. It is the number that drives renewal pricing, so a safety programme that reduces claims shows up here before it shows up in premium. Above about seventy percent an insurer is losing money once expenses are added.

Formula

Loss ratio

Loss ratio = (claims paid + reserves) / premiums earned x 100

Worked example

With the default values below, Insurance Loss Ratio (Safety) Calculator returns Loss ratio of 87.50%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Claims paidminimum 0: 1,800,000
Reserves for open claimsminimum 0: 300,000
Premiums earnedminimum 0.01: 2,400,000

Results

Loss ratio: 87.50% %
Incurred losses: $2,100,000.00
Underwriting margin before expenses: 12.50% %
Claims cost per unit of premium: 0.8750

Step by step

1Values used
2Loss ratio
3Loss ratio= 87.50 %
4Incurred losses= 2,100,000.00
5Underwriting margin before expenses= 12.50 %
6Claims cost per unit of premium= 0.8750

Assumptions and limits

The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is the Insurance Loss Ratio (Safety) figure worked out?

Loss ratio = (claims paid + reserves) / premiums earned x 100. Loss ratio is incurred losses, claims paid plus reserves for open claims, divided by premiums earned.

Why include reserves rather than just paid claims?

Because liability claims take years to settle. Judging a year on paid claims alone flatters recent periods and understates the true cost of injuries already sustained.

What values do I need to enter?

This calculator takes 3 inputs: Claims paid, Reserves for open claims, Premiums earned. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.