If the loss ratio is 100% and the premium is R1500 what premium do I need to charge to make the loss ratio 55%

indecisionIf the loss ratio is 100% and the premium is R1500 what premium do I need to charge to make the loss ratio 55%​​​​​​

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1 Answer

When claims paid + loss adjustments=premium, the loss ratio is 100%. So if the premium is R1500, then claims paid + loss adjustments=R1500.

(claims paid + loss adjustments)/premium=55%=0.55.

If the claims + adjustments = R1500, then 1500/premium=0.55, so premium=1500/0.55=R2727.27.

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