Loss Ratio Method
Definition of "Loss ratio method"
Modification of premium rates by a stipulated uniform percentage for closely related classes of property or liability insurance policies. The objective of such modification is to more directly align the combined actual loss ratio of the classes of policies under consideration with the expected loss ratio of these classes. The resultant alignment should show no significant standard deviation or variation of the actual loss ratio from the expected loss ratio.
Popular Insurance Terms
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Return of a percentage of premium paid by a business firm if its loss record is better than the amount loaded into the basic premium. ...
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