Understanding Combined Ratio
How we calculate. Combined % = (losses + underwriting expenses) ÷ earned premium × 100. The form uses the same arithmetic as the worked examples on this page. See our methodology and accuracy policy.
Real-world scenario: A typical Combined Ratio case uses incurred losses 6500000 and underwriting expenses 2800000. Enter the same figures below to reproduce the worked path.
What is Combined Ratio?
The headline underwriting result: under 100% usually means underwriting profit before investment income; over 100% means an underwriting loss.
- Losses + expenses in the numerator
- Earned premium denominator
- < 100% ≈ underwriting profit (before investment)
The Formula
Worked Example
Common Use Cases
- Carrier dashboards: underwriting result
- Segment compare: lines of business
- Management targets: COR goals
Pro Tips
- Align expense inclusions (LAE vs ULAE)
- Separate investment income from COR
- Label calendar vs accident year
Limitations: Combined Ratio results are educational insurance and agency planning aids—not underwriting, actuarial, claims, or financial advice. Confirm statutory definitions with your carrier, regulator, and finance teams.
FAQ
Is combined ratio the same as loss + expense ratios?
Yes when both component ratios use the same earned-premium denominator: combined ≈ loss ratio + expense ratio.
What if earned premium is 0?
Combined ratio is undefined—enter positive earned premium.
Authoritative References
For insurance ratio and reporting concepts, consult:
- NAIC — U.S. insurance regulatory resources
- Casualty Actuarial Society — actuarial education resources
- Insurance Information Institute — industry explainers