Combined Ratio
A carrier profitability metric: incurred losses plus expenses divided by earned premium. Below 100% means underwriting profit; above means a loss.
businessPublished 2026/06/05
FAQs
- What does a combined ratio below 100% mean?
- The carrier earned an underwriting profit — it collected more premium than it paid in claims and expenses combined.
- How do AI tools affect the combined ratio?
- Fraud detection and better underwriting lower the loss ratio; automation lowers the expense ratio — both improve the combined ratio.
Related Terms
Loss Ratio
The portion of premium paid out in claims: incurred losses divided by earned premium. A core measure of how a book of business is performing.
Predictive Underwriting
Predictive underwriting uses machine learning on historical and external data to forecast a risk's likely loss outcome, helping underwriters price and select
Carrier Appetite
The set of risks a carrier wants to write — by line, industry, size, geography, and risk characteristics.