What is Loss Ratio in Retail? Explained

The Loss Ratio is a financial metric used to measure the ratio of incurred losses, often in the form of insurance claims or damaged goods, to the total premiums or sales. It is commonly utilized in insurance and risk management to assess the efficiency of loss prevention measures. A lower loss ratio indicates effective risk management and profitability, while a higher ratio may suggest increased exposure to risks or inefficiencies in loss prevention strategies. Monitoring the loss ratio is crucial for insurers and retailers alike to maintain financial stability and sustainability.