Definition
The combined ratio is a measure of an insurer’s underwriting profitability. it is the ratio of net incurred claims plus net operating expenses to net earned premiums. A ratio below 100% indicates underwriting profit.
Why it matters (in Poovi’s context)
It is the fundamental benchmark for the Lloyd’s accounts Poovi manages. Monitoring the combined ratio allows for assessment of syndicate performance and rate adequacy.
Key properties or components
- Claims Ratio: Net incurred claims / Net earned premiums.
- Expense Ratio: Net operating expenses / Net earned premiums.
- Underlying Combined Ratio: Combined ratio excluding major claims (catastrophes).
Contradictions or debates
None.