Combined ratio
Also called: claims ratio, loss ratio, insurance expense ratio
A general insurer's claims plus expenses as a percentage of premiums; below 100% means an underwriting profit.
The combined ratio adds the claims (loss) ratio and the expense ratio. An insurer with a combined ratio above 100% loses money on its underwriting and relies on investment income. Fast premium growth with a rising combined ratio often signals underpricing.
Example
Claims of ₹780 crore and expenses of ₹270 crore on premiums of ₹1,000 crore give a combined ratio of 105%.
Learn more in these lessons
- Analysing insurance companiesHow do you analyse an insurance company?
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