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(If you look at loss ratios in the insurance industry -- payouts and claim expenses over premiums collected -- it is closer to ~$1.20 in most fields, and coming
by patio11 10y ago
(If you look at loss ratios in the insurance industry -- payouts and claim expenses over premiums collected -- it is closer to ~$1.20 in most fields, and coming down over time. Yay capitalism!)
- waterhouse 10y ago(You must mean premiums collected divided by payouts and claim expenses. Otherwise, if the inverse ratio were 1.20, that would imply that insurance companies were losing money.)
- patio11 10y agoInverse of loss ratio answers the question "Would I pay $5 to purchase $1 of claims with an expected value of $1?" No; you'd pay far closer to $1.20.