🧮 Combined Ratio Calculator
Measure insurance underwriting performance with combined, loss, and expense ratios.
How to Use This Calculator
Enter Incurred Losses
Input total claims paid plus change in loss reserves for the period.
Add Underwriting Expenses
Include commissions, salaries, and operating expenses tied to policy servicing.
Provide Earned Premiums
Enter premiums earned during the same underwriting period.
Review Results
See combined, loss, and expense ratios along with underwriting profit or loss.
Formula
Combined Ratio = (Incurred Losses + Underwriting Expenses) ÷ Earned Premiums × 100
Loss Ratio = Incurred Losses ÷ Earned Premiums × 100
Expense Ratio = Underwriting Expenses ÷ Earned Premiums × 100
Underwriting Profit = Earned Premiums − (Losses + Expenses)
A combined ratio below 100% indicates underwriting profit, while a ratio above 100% means underwriting losses. Investment income can offset underwriting losses, but maintaining a combined ratio under 100% is a sign of strong underwriting discipline.
Full Description
The combined ratio is a key performance metric for insurance companies that shows whether underwriting operations are profitable. It sums the loss ratio and expense ratio to deliver a comprehensive view of profitability before considering investment income.
Insurers use the combined ratio to monitor underwriting discipline, price adequacy, and operational efficiency. Because premiums are earned long before claims are paid, the ratio helps leadership understand whether current pricing and reserving strategies are sustainable.
When to Use This Calculator
- Evaluate quarterly or annual underwriting performance
- Compare carrier performance across business lines or regions
- Assess effectiveness of cost-control initiatives
- Support actuarial and pricing decisions
Benchmark Guidance
Property & casualty carriers target combined ratios below 95% to leave a cushion for catastrophic events. Specialty lines may tolerate slightly higher ratios because of investment income potential.
Frequently Asked Questions
What is a good combined ratio?
A combined ratio below 100% indicates underwriting profit. Best-in-class carriers often target 90–95% to maintain profitability even during volatile claim periods.
Can investment income offset a high combined ratio?
Yes. Many insurers generate significant investment income. However, a persistently high combined ratio signals underwriting issues that should be addressed.
Does the ratio consider reinsurance?
Enter figures net of reinsurance to understand results from retained risk, or gross values to evaluate the portfolio before reinsurance protections.
How often should I calculate it?
Most carriers monitor the combined ratio monthly and report quarterly. Frequent reviews help identify emerging trends earlier.