Insurers look at loss ratios as an important underwriting tool. They are easy to do. Annual Claims divided by Annual Premium. Example: Premium was $100,000 and Claims were $40,000 Loss Ratio is 40%. Most carriers/insurers want losses to be less than 40% and want three to five years of prior loss experience. What is the loss ratio here: Claims are $50,000 and Premium was $15,000 Claims are $2,000 and Premium was $25,000 Claims are $12,500 and Premium was $75,000