Loss ratio
Loss ratio: Claims paid divided by protection fees collected over the same period. It shows whether a self-funded protection program pays for itself.
How do you calculate it?
Loss ratio = claims paid ÷ protection fees collected. If you collected $1,500 in fees and paid $338 in claims this month, your loss ratio is about 23%.
What is a healthy loss ratio?
Anything well under 100% means fees cover claims with room to spare. As it climbs toward 100%, the program stops paying for itself.
What do you do when it rises?
- Raise the fee or move to price bands by cart value.
- Tighten claim rules: filing windows, photo evidence, claim limits.
- Exclude products or regions where claims cluster.
- Fix the cause: packaging, carrier choice or signature confirmation.
Example
A store sees its loss ratio jump to 70% in December. It adds signature confirmation for orders over $150 and the ratio falls back the next month.
Track it with the shipping protection calculator, read how much to charge for shipping protection, and see Sam Shipping Protection.
Learn more: Order protection guide → · Attach rate · Self-insurance