Glossary
Claims ratio
The claims ratio is the proportion of premium income an insurer pays out in claims over a period, usually expressed as a percentage.
Claims ratio explained
The claims ratio compares what an insurer pays out with what it takes in. For example, if an insurer collected K1,000,000 in premiums in a year and paid K600,000 in claims, its claims ratio for that year would be 60 percent. The exact calculation, such as whether it uses earned or written premium and incurred or paid claims, varies.
A very high ratio can mean the product is underpriced or claims experience is worse than expected. A very low ratio can raise questions about whether the product offers fair value. Insurers, actuaries and regulators watch the ratio by product line over time rather than in isolation.
Why it matters in life insurance
Claims ratios help Zambian life insurers judge pricing, reserving and the health of individual product lines such as funeral cover. Ontech LifeI ERP reports claims against premiums by product, period and channel from the same records used to pay the claims.