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Loss Ratio Calculator

Work out loss ratio instantly with clear inputs, formula shown and shareable results.

About Loss Ratio Calculator

Loss ratio is incurred losses over earned premium, and adding loss adjustment expenses gives the ratio underwriters actually manage. What remains after the loss and LAE ratio is the margin available for acquisition costs, administration and profit — usually 25-35% at best.

Formulas

Loss ratio

Loss ratio % = Incurred losses / Earned premium x 100

Loss and LAE ratio

Ratio % = (Incurred losses + Loss adjustment expenses) / Earned premium x 100

Worked example

With the default values below, Loss Ratio Calculator returns Pure loss ratio of 73.91%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Incurred losses
68,000,000
Earned premium
92,000,000
Loss adjustment expenses
5,500,000

Results

Pure loss ratio
73.91%
Loss and LAE ratio
79.89%
Margin left for expenses and profit
20.11%
Incurred cost per unit of premium
0.7989

Step by step

  1. 1Values used
  2. 2Loss ratio
  3. 3Loss and LAE ratio
  4. 4Pure loss ratio= 73.91
  5. 5Loss and LAE ratio= 79.89
  6. 6Margin left for expenses and profit= 20.11
  7. 7Incurred cost per unit of premium= 0.7989

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 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.
  • Indicative estimate only. Fees, entitlements, limits and formulas vary by jurisdiction, statute, policy wording and the facts of the case. This is not legal, tax, insurance or financial advice — confirm with a qualified professional or the relevant authority.

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

Indicative estimate only. Fees, entitlements, limits and formulas vary by jurisdiction, statute, policy wording and the facts of the case. This is not legal, tax, insurance or financial advice — confirm with a qualified professional or the relevant authority.

Frequently Asked Questions

Should I use written or earned premium?

Earned, so that premium and losses relate to the same exposure period. Written premium distorts the ratio in a growing or shrinking book.

What loss ratio is sustainable?

It depends on the expense ratio. A book with a 30% expense ratio needs a loss ratio below 70% to underwrite profitably.

Related Calculators

Loss Ratio Calculator – Calculate Pure loss ratio | Calcrivo