Underwriting Expense 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 Underwriting Expense 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 Underwriting Expense Ratio (P&C)?
The total cost incurred by the company related to selling, underwriting, onboarding and maintaining (i.e., customer service) property and casualty (P&C) insurance policies divided by total P&C premium earned over the same period of time, as a percentage.
Why should Underwriting Expense Ratio (P&C) be measured?
P&C Insurance Underwriting Expense Ratio measures total company operating expenses (not including claims losses or loss adjustment expense) relative to total P&C premium earned over the same period of time. Aside from paid losses (i.e., claims paid out), the majority of insurance company expenses are tied up in sales (i.e., agency operations, direct channel sales, etc.), underwriting and customer service operations. A relatively high value for this KPI may be a lagging indicator of several issues: ineffective sales strategies or targeting methods, low-producing agents and sales staff, highly manual and inefficient underwriting processes, and poor customer retention can contribute to higher than average operating costs. Keeping operating costs to a minimum is vital for insurance firms, as they rely on investment of excess capital to maintain profitability, cover claims payments and develop distribution channels.
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