Insurance Loss Ratio Calculator

Loss ratio is the core insurance health metric — paid + reserves divided by premium. Under 60%: profitable. 60-85%: acceptable. Above 85%: insurer loses money. Landlords should track loss ratio to anticipate renewal pricing and consider self-insurance when ratios get high.

Paid claims ($)

Earned premium ($)

Reserves (for open claims)

Incurred loss ratio (claims + reserves)

77.78%

Pure loss ratio (paid only)

66.67%

Margin above claims (if positive)

22.22%

Status

Acceptable

How the math works

Loss ratio = claims ÷ premium. Under 60% = insurer highly profitable on this account. 60-85% = acceptable. Over 85% = insurer losing money; renewal will see rate increase or non-renewal. Add reserves (known-but-unpaid) for incurred loss ratio — the actuarial standard.

Insurers target 90-95% combined ratio (claims + expenses). Loss ratios above 80% usually trigger underwriting action; above 100% and the insurer is losing money on the account.

How to Use

Enter paid claims and earned premium.
Enter reserves for any open / pending claims.
Read pure and incurred loss ratios.

Frequently Asked Questions

Why incurred vs paid?

Paid is what's been spent. Incurred includes reserves for claims that are open but not paid out yet. Insurers and actuaries always use incurred — it's more forward-looking and complete.

Renewal signal?

Above 85% incurred loss ratio typically triggers renewal rate increase (10-20%) or non-renewal. 100%+ almost always means non-renewal from that carrier. Shop 60-90 days before policy expiration.

Include legal defense?

Loss adjustment expense (LAE) — legal defense, investigators, settlement — is typically separate from the loss ratio. Carriers sometimes combine into 'loss + LAE ratio.' Ask what your insurer uses.