Combined Ratio (P&C)
This PDF report includes benchmarking data (in a visual, chart-based format), an comprehensive KPI definition, characteristics of high performers and technical details on measuring Combined Ratio (P&C). Purchase and download this easy-to-understand, presentation-ready report immediately to compare performance levels, set attainable performance targets, and push towards best-in-class performance for this KPI.
What is Combined Ratio (P&C)?
P&C Insurance Combined Ratio is the sum of Loss Ratio (claims paid out divided by premium earned) and Underwriting Expense Ratio (cost of sales, underwriting and customer service divided by premium earned). This ratio is a basic measure of an insurance company's overall profitability.
Why should Combined Ratio (P&C) be measured?
Combined Ratio is a common, vital indicator of a property and casualty (P&C) insurance company's profitability. The factors impacting Combined Ratio are simple - premium earned, losses paid out and operating expenses. As one would expect, losses paid out and operating expenses should be kept to a minimum, while earned premium should be maximized. There are countless factors that can impact Combined Ratio: claims leakage, a spike in catastrophe losses, outdated or ineffective underwriting rules, lack of discipline within the company's sales force, lack of strategic direction, subpar customer service and retention, and waste within support and administrative functions of the business (e.g., finance, HR, IT, etc.) can move the needle significantly in terms of Loss Ratio and Underwriting Expense Ratio (and consequently, Combined Ratio).
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