How does an insurers loss ratio is determined by? - ProProfs Discuss
Topics
Products
Follow Us:

How does an insurers loss ratio is determined by?



A. Premiums by combined losses and expenses
B. Premiums by underwriting losses
C. Operating expenses by total premiums
D. Underwriting losses by total premiums

This question is part of Practise Exam 1
Asked by Wyatt Williams, Last updated: Dec 30, 2019

+ Answer
Request

1 Answer

John Smith

John Smith

Answered Feb 19, 2017

Underwriting losses by total premiums

The loss ratio is used to compare the companys loss experience from year to year. It is calculated by dividing the amount of incurred underwriting losses by the earned premium. It can be calculated separately for individual lines of insurance or the companys entire operations.
 1

Kelly Willy

Kelly Willy

Replied on Jul 28, 2019

The responses to this question confused me because of the use of the term "total premium." That's not exactly the same as "Earned Premium." Total premium *could* include Unearned Premium and Written Premium not yet collected, which are technically not included in Loss Ratio. In essence, there was no real correct answer to this question.

Search for Google images
Select a recommended image
Upload from your computer
Search for Google images
Select a recommended image
Upload from your computer
Search for Google images
Select a recommended image
Upload from your computer

Email Sent
We have sent an email to your address "" with instructions to reset your password.