Definition of "Combined ratio"

In insurance, combination of the loss ratio and the expense ratio. The combined ratio is important to an insurance company since it indicates whether or not the company is earning a profit on the business it is writing, not taking into account investment returns on the premiums received. The property and casualty insurance business sometimes goes through cycles. During the 1980s, for instance, it was not unusual to have a combined ratio of over 120%. Obviously, the difference has to be made up from the company's surplus, which in some instances even put the major companies under severe financial strain.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Contract first written in 1918 that provided the basis for modern-day property insurance, both personal and commercial. Forms and endorsements must be added to complete the policy and ...

Relationship of the frequency of illness, sickness, and diseases contracted by individual members of a group to the entire group membership over a particular time period. ...

Principle of law recognizing that injured persons may have contributed to their own injury. For example, by not observing the "Don't Walk" sign at a crosswalk, pedestrians may cause ...

Coverage usually provided under the commercial general liability insurance (CGL); it can also be purchased separately. ...

Payment of premiums before their due date. In pension plans, premium payments are allocated to the payment of future benefits prior to benefits becoming payable. ...

Hospital, physician, or other provider of health care that an insurer recommends to insureds. A PPO allows insurance companies to negotiate directly with hospitals and physicians for health ...

In insurance, combination of the loss ratio and the expense ratio. The combined ratio is important to an insurance company since it indicates whether or not the company is earning a profit ...

Period when the accumulated assets in an annuity are returned to the annuitant. An annuity may be purchased either with a single payment or with many payments over the life of the contract. ...

Same as term Final insurance: premiums paid out of funds borrowed from the cash value of a life insurance policy. ...

Popular Insurance Questions