Understanding Expense Ratio
How we calculate. Expense ratio % = 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 Expense Ratio case uses underwriting expenses 2800000 and earned premium 10000000. Enter the same figures below to reproduce the worked path.
What is Expense Ratio?
An efficiency KPI for distribution and underwriting ops. Some reports use written premium—label that variant clearly.
- Define expense inclusions
- Same period as earned premium
- Pairs with loss and combined ratios
The Formula
Worked Example
Common Use Cases
- Ops reviews: acquisition cost load
- Channel compare: agency vs direct
- COR build: expense component
Pro Tips
- Separate LAE if tracked elsewhere
- Watch commission seasonality
- Don’t mix GAAP and statutory blindly
Limitations: Expense 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
Written premium denominator?
Common in some agency reports—use earned here unless you relabel the metric as written expense ratio.
What if earned premium is 0?
Expense 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