How to Calculate Loss Ratio

Step 1

Add the money paid out in claims for a certain period of time. For instance, a company may have paid out a total of $65,000 in claims during a previous year.

Step 2

Add the money taken in for premiums. For example, a company may have taken in a total of $100,000 in premiums during a particular year.

Step 3

Divide the total from Step 1 by the total from Step 2 to find the loss ratio. In this example, you would divide 65,000 by 100,000 to get a figure of 0.65.

Step 4

Multiply your answer from Step 3 by 100 to state the answer in terms of a fraction. Since 0.65 times 100 equals 65, the loss ratio for this company was 65 percent.