Understanding Pure Loss Ratio
How we calculate. Pure LR % = losses excluding loss adjustment expenses ÷ earned premium × 100. See our methodology and accuracy policy .
Real-world scenario: A typical Pure Loss Ratio case uses losses excluding lae 5850000 and earned premium 10000000. Enter the same figures below to reproduce the worked path.
What is Pure Loss Ratio?
Distinct from the all-in incurred loss ratio when LAE is excluded from the numerator. Useful when you want indemnity experience separate from claims handling cost.
- Exclude LAE from the numerator
- Earned premium denominator
- Pairs with LAE ratio and combined ratio
The Formula
Worked Example
Common Use Cases
- Pricing studies: indemnity-only LR
- LOB compare: strip handling noise
- Reserve reviews: pure vs all-in
Pro Tips
- Label ALAE inclusions carefully
- Don’t mix with written premium
- Cite beside standard loss ratio
| Scenario | When to use |
|---|---|
| Percent of a number | Finding a part of a whole (tax, tip, score) |
| Percent change | Comparing old vs new values |
Limitations: Pure Loss Ratio results are educational insurance and agency planning aids—not underwriting, actuarial, claims, or financial advice. Confirm statutory definitions with your carrier, regulator, and finance teams.
Common mistakes
- Swapping part and whole: The denominator must be the full total, not a subset.
- Rounding too early: Carry extra decimal places through multi-step work before rounding the final percent.
- Mixing percent and decimal forms: Enter rates in the format the calculator labels expect.
The worked example for pure loss ratio was verified with the calculator form on this page—enter the same values to confirm the result.
When to use this calculator
- Use this page when your wording matches pure loss ratio and the form labels on screen.
- Use percent of a number for “what is X% of Y?” problems.
- Use number is what percent when you know part and whole and need the percent.
Still unsure about pure loss ratio? Start with the quick answer above, then open the linked calculator that matches your wording.
❓ Frequently Asked Questions
How do I use this pure loss ratio calculator?
For pure loss ratio, enter the values labeled on the form, then press Calculate. Compare the result to the worked example on this page.
What formula does this page use?
See the quick answer and formula box above for pure loss ratio—the same percentage calculator expression is applied to your inputs.
What if my result looks wrong?
When checking pure loss ratio, re-check part vs whole (or rate vs base), rounding, and whether percents were entered as 25 rather than 0.25 when the form expects percents.
Authoritative References
For insurance ratio and reporting concepts, consult:
- NAIC — U.S. insurance regulatory resources
- Casualty Actuarial Society — actuarial education resources
- Insurance Information Institute — industry explainers