What is the loss ratio of a fleet policy?
The loss ratio is the claims an insurer pays on your fleet divided by the premium you pay, as a percentage. IRMI defines it as the proportionate relationship of incurred losses to earned premiums. A fleet that pays 120,000 in premium and claims 84,000 runs a 70% loss ratio.
The premium is only part of what accidents cost you. The calculator adds what you pay yourself, deductibles and uninsured costs such as downtime, into a total cost of risk, following IRMI's description of cost of risk as premiums plus retained losses and the cost of handling them. It also works out claim frequency per vehicle and per million kilometers, the average claim, the loss ratio trend and a renewal scenario.
Why track the loss ratio yourself?
- It drives the renewal: your claims record is the main fact the insurer looks at; knowing it first puts you on equal terms with your broker.
- Frequency and cost tell different stories: many small claims point to driving habits and yard damage; a few large ones point to serious crashes.
- The premium hides the rest: deductibles, vehicles off the road and admin time are paid by you, not the insurer.
- Per kilometer is fairer: a fleet that drives more has more exposure. Claims per million kilometers compare years and fleets of different use, the way IOGP reports motor vehicle crash rates per million kilometers driven.
What inputs do you need?
| Input | Where to find it | Tip |
|---|---|---|
| Premium and vehicles | Policy schedule and endorsements | Use the premium for the same year as the claims, before VAT. |
| Claims paid and count | The insurer's or broker's claims statement (loss run) | Include open claims at their reserve, or the ratio will look better than it is. |
| Deductible | Policy schedule | If it differs by vehicle type, use the average per claim. |
| Uninsured costs | Workshop invoices, rental of replacement vehicles, downtime | The Road Accident Cost Calculator works out the hidden cost of each crash. |
| Fleet distance | Odometer readings, tracking system reports | Use the same 12 months as the policy year. |
How is it calculated?
Loss ratio, frequency and average claim
Total cost of risk
Trend and renewal
The renewal scenario assumes deductibles and uninsured costs fall in step with the claims reduction you enter. The tool has no premium rates, discounts or target loss ratios of its own: the premium change, the reduction and the target are all yours.
Sources
- Loss ratio: IRMI, Loss Ratio (incurred losses ÷ earned premiums). Source: IRMI.
- Cost of risk: IRMI, Cost of Risk (retained losses, risk control, premiums and administration). Source: IRMI.
- Crash rates per million kilometers: IOGP, Motor Vehicle Crash Data 2008–2014 (report 2014m). Source: IOGP. Last reviewed 21 October 2026.
Worked example: 50 vehicles, 14 claims
The defaults are examples in US dollars; replace them with your policy and claims statement.
- Premium 120,000 and claims 84,000 give a loss ratio of 70%. That is 2,400 premium and 1,680 claims per vehicle.
- 14 claims on 50 vehicles is 0.28 claims per vehicle a year; on 4,000,000 km it is 3.5 claims per million km. The average claim is $6,000.
- Deductibles 14 × 400 = 5,600 and uninsured costs 18,000 bring the total cost of risk to $143,600, or $2,872 per vehicle; 16% of it is paid by the fleet itself.
- Over three years the loss ratio fell from 90% to 70%, and is 79.7% over the period.
- With an 8% premium increase and claims as this year, next year's premium is $129,600 and the loss ratio 64.8%; the total cost of risk rises by $9,600.
How to read your results
- A loss ratio above 100% means the insurer paid more in claims than it received in premium. Expect that record to weigh on the renewal.
- Claims per million km shows whether the record improved or the fleet simply drove less.
- The average claim separates many small incidents from a few serious ones; each needs a different fix.
- The share you pay yourself grows with high deductibles; a cheaper policy with a higher deductible moves cost to you, not away.
How to lower fleet insurance cost
- Work on the cause of claims: rank drivers by speeding and harsh driving, coach the worst first, and track the trend with the Driver Safety Score Calculator (RAG) or a driver scorecard.
- Report and investigate every incident: near misses and small damage show where the next large claim will come from. Use the near-miss report.
- Bring data to the renewal: loss ratio by year, frequency per million km and what you changed in the fleet's driving; the Fleet Insurance Renewal Pack puts it in one file. In Saudi Arabia, Najm launched a telematics program in 2024 that scores driving, and its announcement says drivers can earn insurance rewards and discounts; ask your insurer what applies to fleets.
- Know the full cost of a crash: work it out with the Road Accident Cost Calculator.
Assumptions and limits
The loss ratio here is claims ÷ premium for the figures you enter; insurers may use earned premium, include claim handling costs or develop open claims, so their figure can differ. The tool does not price a policy, predict a renewal or know any insurer's rates or targets. Every default is an example. This is a planning aid, not insurance, financial or legal advice.