The loss ratio is a measure of premiums collected over the claims paid out in each year.

However, it omits future long-term claims and premium rebates, which are a large part of what MediShield Life premiums are meant to support. For example, MediShield Life covers a dialysis patient’s treatment over many years. These are future liabilities that will not be accounted for in the loss ratio, which only compares premiums collected against claims paid over a single year.  

On the other hand, the Operating Loss Ratio also accounts for the premiums collected to meet the Scheme’s future liabilities, on top of the amount set aside to pay out for claims received each year. It represents a longer-term view of fund sustainability as it measures whether premiums collected are adequate to meet the scheme’s current and future commitments.