On average, everyone loses money in buying insurance.

That's understandable. Insurance have overhead costs and insurance companies want to make profit.

Not all premium is paid to cover coverage.

There is a ratio. Say the ratio is 90% or 80%. What's that ratio is called?

coverage to premium ratio. What is it called?

I want to see this from customers' point of view.

  • When you say 'from a customers point of view', what do you mean? As in - the ratio of your expected losses compared to premiums, without considering admin costs of running the insurance company? – Grade 'Eh' Bacon Mar 30 '20 at 14:33
  • Basically yea. I don't care how much money the insurance company spend for whatever. For every $100, I want to know how much on average I will get in reimbursement? $80? That depends on probability I got sick times cost of sickness I guess. Of course, I do not know the exact numbers of those. – user4234 Mar 31 '20 at 10:40
  • Yes, then what you want is the 'loss ratio'; see the answer provided. – Grade 'Eh' Bacon Mar 31 '20 at 12:47

There are two ratios of interest: combined ratio and loss ratio.

See for example this: https://www.investopedia.com/ask/answers/042315/what-difference-between-loss-ratio-and-combined-ratio.asp

The loss ratio is calculated by dividing the total incurred losses by the total collected insurance premiums.

A combined ratio measures the money flowing out of an insurance company in the form of dividends, expenses, and losses.

Is any of these what you were looking for?


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