Veszteségarány

Veszteségarány is a Hungarian term that translates to "loss ratio" or "loss percentage" in English. It is a key metric used in the insurance industry to assess the financial performance of an insurance company and the effectiveness of its underwriting.

The loss ratio is calculated by dividing the total amount of claims paid out by an insurer by the total amount of premiums earned over a specific period. The formula is: Loss Ratio = (Incurred Losses / Earned Premiums) * 100. A lower loss ratio generally indicates that an insurer is paying out fewer claims relative to the premiums it is collecting, suggesting strong underwriting practices and potentially higher profitability.

Insurers use the loss ratio to evaluate various aspects of their business. It helps them understand the profitability of different insurance products, identify areas where claims costs might be too high, and make informed decisions about pricing and reserving. A consistently high loss ratio can signal that premiums may be set too low, that underwriting standards are too lenient, or that the insurer is experiencing an unusually high frequency or severity of claims.

Conversely, a very low loss ratio might suggest that premiums are too high, potentially making the insurer less competitive in the market. Therefore, insurance companies aim to maintain a loss ratio within a target range that balances profitability with market competitiveness. Regulatory bodies also monitor loss ratios as an indicator of an insurer's financial health and ability to meet its obligations to policyholders.