Loss ratio

Definition

The share of premium paid back out in claims, which every carrier watches on the agency's book.

Why It Matters

A low ratio is what earns and keeps carrier appointments and profit-sharing, so it is diligence on the quality of the revenue rather than its size. A book running hot risks both at once: the contingent income disappears first, and the appointment can follow, which takes the market with it. Ask for three years by carrier, because one bad storm year reads very differently from a book that has been underpriced for a decade.