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For insurance, the loss ratio is the ratio of total losses incurred (paid and reserved) in claims plus adjustment expenses divided by the total premiums earned. [1] For example, if an insurance company pays $60 in claims for every $100 in collected premiums, then its loss ratio is 60% with a profit ratio/gross margin of 40% or $40.
It is primarily used in the property and casualty [5] [9] and health insurance [2] fields. Generally considered a blend of the chain-ladder and expected claims loss reserving methods, [2] [8] [10] the Bornhuetter–Ferguson method uses both reported or paid losses as well as an a priori expected loss ratio to arrive at an ultimate loss estimate.
The chain-ladder or development[1] method is a prominent [2][3] actuarial loss reserving technique. The chain-ladder method is used in both the property and casualty [1][4] and health insurance [5] fields. Its intent is to estimate incurred but not reported claims and project ultimate loss amounts. [5] The primary underlying assumption of the ...
Medical care ratio (MCR), also known as medical cost ratio, medical loss ratio, and medical benefit ratio, is a metric used in managed health care and health insurance to measure medical costs as a percentage of premium revenues. [1] It is a type of loss ratio, which is a common metric in insurance measuring the percentage of premiums paid out ...
Collateral Protection Insurance, or CPI, insures property held as collateral for loans made by lending institutions. CPI, also known as force-placed insurance and lender placed insurance, [1] may be classified as single-interest insurance if it protects the interest of the lender, a single party, or as dual-interest insurance coverage if it protects the interest of both the lender and the ...
Loss development factor. Loss development factors or LDFs are used in insurance pricing and reserving to adjust claims to their projected ultimate level. [1][2] Insurance claims, especially in long-tailed lines such as liability insurance, are often not paid out immediately. Claims adjusters set initial case reserves for claims; however, it is ...
A loss of $0.05 is perceived with a much greater utility loss than the utility increase of a comparable gain. Loss aversion is a psychological and economic concept, [1] which refers to how outcomes are interpreted as gains and losses where losses are subject to more sensitivity in people's responses compared to equivalent gains acquired. [2]
Today, Ally stock trades at a price-to-earnings ratio of 14.6, which is about half the S&P 500 index's average. Remember, too, that these are depressed earnings. Remember, too, that these are ...