What do actual loss ratios relate to?

Actual loss ratios refer to the calculation of losses incurred by an insurer during a specific period, expressed as a percentage of the earned premiums for that same period. The key aspect of actual loss ratios is that they represent raw data without any adjustments factored in. This simplicity allows for a clear comparison of an insurer's performance over time or against benchmarks.

When stating that actual loss ratios "have not had any adjustments factored in," it indicates that they reflect the straightforward losses experienced relative to the premiums earned, without considerations for factors like inflation, reinsurance costs, or other modifications that might distort the true picture of underwriting performance. This unadjusted nature makes the actual loss ratio a critical measure in evaluating an insurer's underwriting effectiveness and risk management for that period, providing a distinct insight into their financial health.