The true underwriting performance of any non-life insurer is it Gross Loss Ratio.

Gross Loss Ratio = (Gross Incurred Claims/Gross Earned Premium).

In India, from publicly available figures, Gross Loss Ratio is never mentioned nor is it easy to calculate the Gross Loss Ratio.

Banks give both Gross Non-Performing Assets as well as Net Non-Performing Assets.

But Insurers only give Net Loss Ratio but never their Gross Loss Ratio.

Even if we want to use the publicly available figures, it is very difficult to calculate. This is because:

Adjustment for change in reserve for unexpired risks is given on net basis.

Similarly, Claims Outstanding at the end of the year as well as Claims Outstanding at the beginning of the year are also given on Net basis.

Hence, we cannot calculate the Gross Loss Ratio – which is a true indicator of the Underwriting performance of a company.

I am an engineer and not having accounts background. Hence, I may be missing some publicly available data which can enable one to calculate the Gross Loss Ratio. If so, I am open to be corrected.

Blog by Atmaram Cheruvu