How to Use Combined Ratio Calculator
The Combined Ratio Calculator helps insurance professionals evaluate underwriting performance. Enter incurred losses, underwriting expenses, and earned premium, or switch to ratio mode and provide loss and expense ratios directly. The Combined Ratio Calculator then displays the loss ratio, expense ratio, and combined ratio.
- Choose Input Mode — Amounts or ratios.
- Enter Values — Losses, expenses, premium or loss ratio and expense ratio.
- Review Combined Ratio — Compare against 100% to judge underwriting profitability.
Formula & Theory - Combined Ratio Calculator
The Combined Ratio Calculator uses these formulas:
Loss Ratio = Incurred Losses / Earned Premium × 100%
Expense Ratio = Underwriting Expenses / Earned Premium × 100%
Combined Ratio = Loss Ratio + Expense Ratio| Symbol | Meaning |
|---|---|
| Incurred Losses | Total claims paid plus reserves for the period |
| Underwriting Expenses | Commissions, taxes, and operating costs tied to underwriting |
| Earned Premium | Premium recognized as earned during the period |
Assumptions and Limits
The Combined Ratio Calculator does not consider investment income. Insurers with strong investment portfolios may stay profitable overall even with a combined ratio above 100%.
Use Cases for Combined Ratio Calculator
The Combined Ratio Calculator is helpful for:
- Insurance operations — Track underwriting performance by line or region.
- Financial analysis — Compare insurers in equity research.
- Reinsurance pricing — Evaluate the impact of ceding losses or expenses.
- Strategic planning — Identify lines that need expense reductions or premium increases.
Use the Combined Ratio Calculator alongside loss reserve and investment yield analysis for a full picture.