The insurance loss ratio analysis is an assessment of the difference between the premiums that are paid to an insurance company and the settlement of claims done by that company. The loss ratio is used to assess the entire loss that needs to be paid by the insurance company and this is in the form of claims. These losses are totally added up and then adjusted to any expenses that are relevant. The insurance company then divides the entire earnings or premiums. The analysis is dependent on the sort of insurance this is being calculate for.
There are different loss ratios for different companies. The health insurance has more loss ration in terms of casualty and property than the others. This analysis is able to provide insight on how well the company is faring. The ration also shows whether the collection of premiums is higher than the payment made in claims or whether the premiums can’t cover the claims. Higher losses lead to financial problems.
Sample Insurance Loss Ratio Analysis
Name of Insurance Company: UNOGET Insurance Ltd.
Type of Insurance: Car Insurance
Analysis conducted by: Superb Co.
Purpose of Analysis: To gauge the amount of premiums collected against the claims that have been settled for the TCBY Car Parts Insurance in 2011.
As per the data and statistics collected, the TCBY Car Parts Insurance was introduced in 2009 and the analysis is based only on last year’s performance:
- No. of beneficiaries: 2.3 million
- Insurance benefits: Coverage of over $40,000 a year for car parts as specified within the list
- Insurance premium collected: $234 per month for the first six months and then $100 per month
- Insurance claims that have been settled: $1 million
- Insurance premium average collected: $2 million
Loss Ratio: 2:1