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UNDERWRITING RATIO

5. Loss Ratio

Loss Ratio

200%
100%
81.53% 105.75% 88.46%
0%
2018 2017 2016
2018 2017 2016

Loss ratio is a measure of the actual risk coverage per unit of premiums that the insurer
has already earned. The graph shows that, it indicates lower ratio from the year 2017 to 2018
where there is decreases in loss ratio from 105.74% to 81.53%. Meaning that, the lower the loss

rate ratio, the better for the company. While, For the year 2016 to 2017, it Indicates higher ratio
which is there is increases from 88.46% to 105.74%. The suggestion to lower the ratio so that the

insurance company can become more efficient which the insurance company may need better
risk management policies to guard against future possible insurance payouts.

6. Expenses Ratio

Expenses Ratio

40%
20% -35.18
-20.39% -21.22
0%
2018 2017 2016
2018 2017 2016

Expense ratio reflects the efficiency of insurance operations. A high expense ratio may be due
to a rise in market competition such as high commissions and brokerage fee or inflation in the
territory of operation. There is decreases which are, from 35.18% to 21.22% to 20.39%. Meaning

that, the lower the loss rate ratio, the better for the company. The suggestion for improvement,
where the company should leverage advertising spending and have well-known brand names that
help attract investor and the company may employ direct-sales techniques to cut out the

insurance agents and brokers. So that the insurance company can become more profitable and
efficient in operation.

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