Combined Loss Ratio Calculator

Calculate Combined Loss Ratio





Formula

The formula to calculate the Combined Loss Ratio (CLR) is:

\[ \text{CLR} = \frac{\text{IL} + \text{ILAE}}{\text{EP}} \]

Where:

Definitions

Example

Let's say the incurred losses are $500,000, the incurred loss adjustment expenses are $100,000, and the earned premiums are $1,000,000. Using the formula:

\[ \text{CLR} = \frac{500000 + 100000}{1000000} \]

We get:

\[ \text{CLR} = 0.6 \]

So, the combined loss ratio is 0.6 or 60%.

Extended information about Combined-Loss-Ratio-Calculator

Extended information about How to Calculate Loss Ratio

Definition: The loss ratio is the ratio of losses paid to premiums earned.

Formula: \( LR = \frac{Losses\ Paid}{Premiums\ Earned} \)

Example: \( LR = \frac{500000}{1000000} \)

Extended information about Insurance Loss Ratio vs Combined Ratio

Definition: The combined ratio is the sum of the loss ratio and the expense ratio, indicating the overall profitability of an insurance company.

Formula: \( CR = LR + ER \)

Example: \( CR = 0.5 + 0.3 \)

Extended information about Calculate Loss Ratio Formula

Definition: The loss ratio formula calculates the proportion of premiums used to pay claims.

Formula: \( LR = \frac{Claims\ Paid}{Premiums\ Earned} \)

Example: \( LR = \frac{300000}{900000} \)

Extended information about Medical Loss Ratio Calculator

Definition: The medical loss ratio (MLR) measures the percentage of premium revenues spent on clinical services and quality improvement.

Formula: \( MLR = \frac{Medical\ Claims\ Paid}{Premiums\ Earned} \)

Example: \( MLR = \frac{400000}{800000} \)

Extended information about Correct Formula for Computing a Loss Ratio

Definition: The correct formula for computing a loss ratio involves dividing the total losses by the total premiums earned.

Formula: \( LR = \frac{Total\ Losses}{Total\ Premiums\ Earned} \)

Example: \( LR = \frac{250000}{750000} \)