A combined ratio brings together specified claims and expense measures relative to premium measures.
The distinction that matters
Definitions and accounting bases matter; a ratio is not a prediction of an individual policyholder’s claim outcome.
What to check
- Check gross or net basis.
- Read the numerator and denominator definitions.
- Separate underwriting results from investment returns.
Example to discuss
Two insurers report different ratios, so an analyst checks whether both use the same premium and expense basis before comparing them.
This is a hypothetical comparison, not a customer claim or a determination of cover.
Jurisdiction and scope
Use the definition in the report being analysed. Changes in business mix, reinsurance, estimation and reporting methods can affect interpretation. These measures do not determine whether an individual claim is covered.
Sources and further reading
General information only. The policy, schedule and applicable rules determine the actual position. For a personal decision, use an appropriately qualified adviser or the relevant provider.