loss ratio

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The total of the claims paid out by an insurance company, underwriting syndicate, etc., expressed as a percentage of the amount of premiums coming in during the same period. For example, if claims total £2M and premiums total £4M, the result is a 50% loss ratio. Insurers use this figure as a guide to the profitability of their business when they are reconsidering premium rates for a particular risk.

Subjects: Financial Institutions and Services.

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