Introduction for define of loss ratio:
A relation is getting form the comparison of two quantities like in some wisdom is called a ratio. Ratio will be show by the terms of fraction, that is, a: b is equal to `a/b` for example 25 is `1/4` of the hundred; Therefore, the ratio of 25 to 100 is `1/4.` We can write it in ratio as 1:4. The loss ration is calculated as the total money paid out is divided by the sum of the money is taken for the premium is multiplied by the 100.
Loss ratio = `"total money paid out"/"sum of money taken for premium"` `xx` 100
Example for Define of Loss Ratio:
Example:
A company has paid out `$` 65000 in claims of a previous year to john. But the company has taken in a total of `$` 100000 in premiums during a particular year. Calculate the loss ratio to define.
Solution:
Total money paid out = `$` 65000
Sum of money taken for premium = `$` 100000
Loss ratio = `"total money paid out"/"sum of money taken for premium"` `xx` 100
= `65000/100000` `xx` 100
= `65/100` `xx` 100
= .65 `xx` 100
= 65%
Therefore the loss ratio for the company is 65% .
Practice Problems for Definition of Loss Ratio:
Problem 1:
A company has paid out `$` 70000 in claims of a previous year to Martin. But the company has taken in a total of `$` 150000 in premiums during a particular year. Calculate the loss ratio to define.
Solution: The loss ratio for the company is 46.67%
Problem 2:
A company has paid out `$` 75000 in claims of a previous year to Paul. But the company has taken in a total of `$` 200000 in premiums during a particular year. Calculate the loss ratio to define.
Solution: The loss ratio for the company is 37.5%
Problem 3:
A company has paid out `$` 80000 in claims of a previous year to Sarra. But the company has taken in a total of `$` 250000 in premiums during a particular year. Calculate the loss ratio to define.
Solution: The loss ratio for the company is 32%
A relation is getting form the comparison of two quantities like in some wisdom is called a ratio. Ratio will be show by the terms of fraction, that is, a: b is equal to `a/b` for example 25 is `1/4` of the hundred; Therefore, the ratio of 25 to 100 is `1/4.` We can write it in ratio as 1:4. The loss ration is calculated as the total money paid out is divided by the sum of the money is taken for the premium is multiplied by the 100.
Loss ratio = `"total money paid out"/"sum of money taken for premium"` `xx` 100
Example for Define of Loss Ratio:
Example:
A company has paid out `$` 65000 in claims of a previous year to john. But the company has taken in a total of `$` 100000 in premiums during a particular year. Calculate the loss ratio to define.
Solution:
Total money paid out = `$` 65000
Sum of money taken for premium = `$` 100000
Loss ratio = `"total money paid out"/"sum of money taken for premium"` `xx` 100
= `65000/100000` `xx` 100
= `65/100` `xx` 100
= .65 `xx` 100
= 65%
Therefore the loss ratio for the company is 65% .
Practice Problems for Definition of Loss Ratio:
Problem 1:
A company has paid out `$` 70000 in claims of a previous year to Martin. But the company has taken in a total of `$` 150000 in premiums during a particular year. Calculate the loss ratio to define.
Solution: The loss ratio for the company is 46.67%
Problem 2:
A company has paid out `$` 75000 in claims of a previous year to Paul. But the company has taken in a total of `$` 200000 in premiums during a particular year. Calculate the loss ratio to define.
Solution: The loss ratio for the company is 37.5%
Problem 3:
A company has paid out `$` 80000 in claims of a previous year to Sarra. But the company has taken in a total of `$` 250000 in premiums during a particular year. Calculate the loss ratio to define.
Solution: The loss ratio for the company is 32%
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