Combined Ratio Calculator — Insurance Underwriting
The combined ratio is the primary profitability metric for property and casualty insurers. Enter losses, expenses, and premiums to calculate the loss ratio, expense ratio, and combined ratio — and see instantly whether the underwriting book is profitable.
Underwriting loss — claims and expenses exceed premiums earned
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Loss ratio
(65,000,000 + 8,000,000) ÷ 100,000,000 × 100 = 73 - 2
Expense ratio
28,000,000 ÷ 102,000,000 × 100 = 27.5 - 3
Combined ratio
73 + 27.5 = 100.5Below 100% is an underwriting profit; above 100% is a loss.
How does this calculator work?
Combined Ratio = Loss Ratio + Expense Ratio, where Loss Ratio = (Losses + LAE) ÷ Earned Premiums and Expense Ratio = Expenses ÷ Written Premiums. Under 100% is an underwriting profit; over 100% means claims and expenses exceed premiums. Investment income can still make a > 100% book overall profitable.
Formula
How this is calculated
The combined ratio measures whether a property & casualty insurer makes money from underwriting alone, before investment income. It adds two components: the loss ratio (how much of earned premiums is paid out in claims and loss-adjustment expenses) and the expense ratio (underwriting costs as a percentage of written premiums). A combined ratio below 100% signals an underwriting profit; above 100% means the insurer is paying out more in claims and costs than it takes in from premiums, and must rely on investment income to break even overall.
The two denominators differ by convention. Loss ratio uses earned premiums — the portion of written premiums that corresponds to coverage already provided — because claims relate to past coverage. The expense ratio traditionally uses written premiums (the "Trade Basis" common in the US and UK) because commissions and acquisition costs are incurred when policies are written, not as they are earned. Some regulators and rating agencies use earned premiums for both; this calculator uses the standard Trade Basis convention.
A 100% combined ratio means the insurer is breaking even on underwriting; industry-wide combined ratios typically range from about 95% to 110%. Investment income on the float (premiums held before claims are paid) means many insurers remain profitable even with combined ratios above 100%.
Frequently asked questions
Below 100% means an underwriting profit. Consistently below 95% is considered excellent. Many large P&C insurers target 95–99%. A ratio above 105% sustained over several years signals underwriting problems, though investment income can offset this.
LAE covers the costs of investigating, verifying, and settling claims — salaries of claims adjusters, legal fees, and expert witness costs. It is distinct from the actual claims payout (indemnity) but is still a cost caused by claims, so it belongs in the loss ratio numerator.
Written premiums are the total premiums on new policies during a period. Earned premiums are the portion that has been "used up" — if you write a 12-month policy in July, only half the premium is earned by December 31. Earned premiums match to the coverage period; written premiums match to when the policy was sold.
Also known as
TG we-Calculate Editorial Team. (2026). Combined Ratio Calculator — Insurance Underwriting [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/combined-ratio-calculator
TG we-Calculate Editorial Team. "Combined Ratio Calculator — Insurance Underwriting." TG we-Calculate. 2026. https://we-calculate.com/calculator/combined-ratio-calculator.
TG we-Calculate Editorial Team, "Combined Ratio Calculator — Insurance Underwriting," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/combined-ratio-calculator
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