Loss ratio

Claims incurred as a percentage of premiums earned. An insurer paying ₹2,040 crore of claims on ₹3,000 crore of premium runs a 68% loss ratio.

The ratio moves with pricing discipline, with claims inflation, and with the mix of business. Motor third-party, health and crop insurance behave very differently and a shift in mix moves the aggregate without any change in underwriting quality.

Reserve adequacy sits behind the number. Under-reserving lowers today's loss ratio and raises tomorrow's, which is the general insurance version of borrowing profit from the future.

Prior-year reserve movements are disclosed. Read them.