Loss Ratio
Claims incurred divided by premiums earned, expressed as a percentage. A core measure of underwriting performance.
The loss ratio measures the proportion of premiums paid out as insurance or reinsurance claims. It equals claims incurred divided by premiums earned, expressed as a percentage.
A loss ratio of 70% means that for every £100 of premium collected, £70 was paid out in claims. The remaining 30% must cover expenses and generate profit. Combined with the expense ratio, the loss ratio forms the combined ratio — the headline measure of underwriting profitability.
Catastrophe events cause significant loss ratio volatility. A reinsurer with a low attritional loss ratio may post a full-year loss ratio above 100% following a major event. Reinsurers manage this through diversification, retrocession, and ILS purchasing.
Example usage
“Munich Re's property-casualty reinsurance loss ratio was 67.3% in Q1 2026, including $850m of catastrophe losses.”
Frequently asked questions
What is Loss Ratio?
Claims incurred divided by premiums earned, expressed as a percentage. A core measure of underwriting performance. The loss ratio measures the proportion of premiums paid out as insurance or reinsurance claims. It equals claims incurred divided by premiums earned, expressed as a percentage.
How is Loss Ratio used in practice?
Munich Re's property-casualty reinsurance loss ratio was 67.3% in Q1 2026, including $850m of catastrophe losses.
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