Market & Carriers
Loss Ratio
The share of premium dollars an insurer pays out in claims — the core number that decides whether a carrier keeps writing in a market.
A loss ratio is claims paid divided by premiums earned over a period, usually expressed as a percentage. A 65% loss ratio means an insurer paid out 65 cents in claims for every premium dollar collected, leaving the rest to cover operating expenses, reinsurance, and profit. A combined ratio goes further, adding underwriting expenses to claims — over 100% generally means the insurer is losing money on underwriting alone, before investment income.
Loss ratio is calculated at every level a carrier tracks — company-wide, by state, by peril, sometimes by ZIP code or hazard tier — and it's the single most direct input into whether that segment stays open to new business or gets non-renewed.
Why it matters
- A sustained high loss ratio in a geography or peril class is the underlying reason behind almost every wave of non-renewals and carrier appetite pullback.
- It's a lagging, backward-looking number — a carrier tightening today is usually reacting to loss experience from prior storm seasons, not predicting the next one.
Related terms
Non-Renewal
A carrier's decision not to renew a policy at its next term — distinct from a cancellation, and the leading edge of a market pulling back from a geography.
Carrier Appetite
An insurer's current willingness to write new business for a given peril, geography, and property type — appetite shifts far faster than most people expect.
1 free property search · no credit card required