Understanding Loss Ratio in Group Medical Insurance
Understanding Loss Ratio in Group Medical Insurance
If you’re managing employee health benefits in Hong Kong or Singapore, you’ve probably come across the term loss ratio. But what exactly does it mean, and why should it matter to your business? Understanding loss ratio helps you make informed decisions when renewing or negotiating your group medical insurance plan—potentially saving your company money while ensuring your team stays protected.
What is Loss Ratio?
Loss ratio is a measure used by insurers to calculate how much they pay in claims compared to the premiums collected. In simple terms, it shows whether your group plan is costing the insurer more or less than expected.
Formula:
Loss Ratio = (Claims Paid / Premiums Paid) x 100
A low loss ratio (e.g., 40%) means claims are much lower than the premiums paid.
A high loss ratio (e.g., 90%+) means claims are close to or exceeding premiums collected.
How Does Loss Ratio Affect Your Group Plan?
Premium adjustments: If your group has a consistently high loss ratio, insurers may increase your premiums at renewal to cover their risk.
Negotiation power: A low loss ratio can help you negotiate better terms, such as lower premiums or enhanced benefits.
Plan design review: A high loss ratio may prompt a review of your plan structure—are the benefits too generous? Should co-pays or limits be adjusted?
Why Should Start-ups and SMEs Pay Attention to Loss Ratio?
Cost management: Keeping an eye on loss ratio helps ensure your employee benefits remain sustainable.
Transparency: Understanding how your plan performs allows you to engage confidently with insurers at renewal.
Wellbeing strategy: A spike in claims may signal a need for enhanced wellness programs or mental health support.
Tips for Managing Your Loss Ratio
✅ Review your claims data annually – Understand what’s driving claims and explore wellness initiatives that could help.
✅ Design a balanced plan – Consider including co-pays or tiered benefits to manage costs without compromising employee care.
✅ Work with an expert advisor – Interexpat helps you monitor loss ratio trends and guides you in negotiating fair renewals.
Next Steps
Want clarity on how your group plan’s loss ratio impacts your costs? Let our advisors review your plan and help you find ways to optimize coverage and control premiums.
👉 Request a Free Plan Audit
👉 Speak to a Group Medical Expert
