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Cited category: Finance & Supply Chain

Insurance Combined Ratio Calculator

Calculate P&C underwriting profitability from incurred losses, LAE, premium, and underwriting expenses using standard combined-ratio definitions.

Inputs

Enter non-negative amounts. Earned premium must be greater than zero.

Losses incurred during the period.
Claim handling and adjustment costs.
Premium earned over the reporting period.
Acquisition, general, and other underwriting expenses.
Required for trade-basis expense ratio.
Choose the denominator used for underwriting expenses.

Results

Expense ratio uses written premium on the trade basis.

Loss ratio -- Incurred losses + LAE / earned premium
Expense ratio -- Underwriting expenses / written premium
Combined ratio -- Loss ratio + expense ratio
Underwriting result -- Margin: --

Enter valid inputs

The calculator will classify combined ratios below 100% as underwriting profit, equal to 100% as break-even, and above 100% as underwriting loss.

Input summary

Calculated summary

P&C Definitions Cited

This tool applies standard property and casualty underwriting profitability definitions: loss ratio, expense ratio, combined ratio, and underwriting profit margin.

  • Loss ratio: (incurred losses + LAE) / earned premium.
  • Expense ratio: underwriting expenses / written premium on the trade basis, or / earned premium on the statutory basis.
  • Combined ratio: loss ratio + expense ratio. A combined ratio below 100% indicates underwriting profit before investment income.
  • Underwriting profit margin: 1 - combined ratio.

Self-Tests

Self-tests not run.

About the Insurance Combined Ratio Calculator

Insurance finance, underwriting, and reinsurance teams use an insurance combined ratio calculation to evaluate underwriting profitability before investment income. By combining loss ratio and expense ratio, the page shows whether premiums are covering claims, loss adjustment expenses, and operating expenses, which supports portfolio reviews, pricing discussions, and carrier performance comparisons.

How it works

  1. Enter earned premium for the period being analyzed.
  2. Add incurred losses and loss adjustment expenses.
  3. Add underwriting expenses, acquisition costs, or operating expenses as your basis requires.
  4. Review the loss ratio, expense ratio, and combined ratio.
  5. Compare the result with target ratios, prior periods, or peer benchmarks.

Frequently asked questions

What does a combined ratio below 100 percent mean?

It usually indicates an underwriting profit before investment income because losses and expenses are less than earned premium. A ratio above 100 percent indicates an underwriting loss on that basis.

Should loss adjustment expense be included in the loss ratio?

Many property and casualty analyses include loss adjustment expense with incurred losses. Use the same basis as the financial statement, actuarial exhibit, or management report you are comparing against.

Is combined ratio the same as overall insurer profitability?

No. It focuses on underwriting performance. Net income also reflects investment income, taxes, realized gains and losses, reserve changes, and other non-underwriting items.

Can I calculate combined ratio for a single line of business?

Yes. Use earned premium, losses, and expenses attributable to that line. Allocation methods matter, especially for shared expenses and reinsurance effects.

References