- What is Combined Ratio?
- What is Combined Ratio used for?
- Example of how to calculate Combined Ratio…
- How the experts make Combined Ratio work tor them
- Common mistakes and how to avoid them
Combined Ratio is a measure of performance used by underwriters/insurance companies.
Combined Ratio is perhaps the most useful way to determine the profitability of an underwriting operation.
To calculate Combined Ratio simply add the Loss Ratio to the Expense Ratio.
Combined Ratio = Loss Ratio + Expense Ratio
A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss. Ensuring easy access to accurate Combined Ratio figures is critical for underwriters; without it or some meaningful equivalent we cannot ever be certain of company position, and therefore cannot expand or make float investments.
Combined Ratio is dead simple to calculate providing you have access to accurate Loss Ratio and Expense Ratio figures. To ensure you get this right, first read our respective articles on Loss Ratios and Expense Ratios.
As ever. we absolutely thrive on your questions and feedback. Leave us a comment below!
Need to calculate the Combined Ratio? Use our free to use and access, underwriting claims ratios calculator. If you need help using the calculator please see our brief manual for the underwriting claims ratios calculator here.Google+