Combined Ratio
Plain English Definition: A measure of an insurance company’s profitability calculated by adding loss and expense ratios.
What Combined Ratio really means for someone with an insurance policy
It shows whether an insurer is making money from underwriting. A ratio below 100% indicates profit, while above 100% shows a loss.
Combined Ratio Real World Examples
- An insurer with a 90% combined ratio earns a profit from its underwriting activities.
- A combined ratio of 105% suggests the insurer is operating at a loss due to high claims or expenses.
- Monitoring combined ratios helps investors gauge an insurer’s financial health.