A student accident insurance company underwriter once confided to me how he rates his renewals. “It’s easy peasy” he said.
“I like a 70% targeted loss ratio. So you divide net paid claim loss ratio by .70” he whispered softly. “If you want to be aggressive, raise your targeted loss ratio.”
“For example, a paid loss ratio of 90% = 28% rate increase. A 60% loss ratio = 14.3% decrease.”
