Category: Capacity and rating · Reviewed by Mark Fox, Broker · Renewals · Last reviewed 2026-06-05
The combined ratio is the principal measure of underwriting profitability for general insurers and reinsurers. It is the sum of the loss ratio and the expense ratio, expressed as a percentage of earned premium. A combined ratio below 100 per cent indicates an underwriting profit; above 100 per cent, an underwriting loss.
Category: Capacity and rating Also known as: COR, combined operating ratio Related concepts: loss ratio, expense ratio, reinsurance cycle
The combined ratio is calculated as:
Combined Ratio = Loss Ratio + Expense Ratio
Where:
A combined ratio of 95 per cent indicates that for every £100 of earned premium the insurer incurs £95 of losses and expenses, producing a £5 underwriting profit. Investment income on premium and reserves is reported separately and added to underwriting profit to determine the insurer’s overall result.
The combined ratio is the principal performance metric reported under IFRS 17 and (for Lloyd’s syndicates) in syndicate annual reports. The PRA monitors combined ratios as part of prudential supervision. Lloyd’s reports a market-wide combined ratio in its annual report (86.9 per cent for 2024 calendar year).
The combined ratio is the principal benchmark by which underwriters, brokers, regulators and rating agencies assess insurer performance. Combined ratios below 90 per cent represent strong performance; 90–95 per cent solid performance; 95–100 per cent acceptable; above 100 per cent indicating underwriting loss.
The components of the combined ratio differ by class: short-tail classes (property, motor) typically have higher loss ratios but lower expense ratios; long-tail classes (casualty, PI) typically have lower loss ratios but higher expense ratios; speciality classes (aviation, marine) have wide variation depending on loss experience.
The combined ratio is sensitive to: rate adequacy (poor pricing produces high loss ratios); catastrophe experience (a major event can lift the loss ratio by 20+ points); reserve adjustments (prior year strengthening or releases); and inflation in claims costs.
An illustrative example: a UK motor insurer reports gross written premium of £500m, earned premium of £490m, incurred claims of £350m (loss ratio 71.4 per cent) and expenses of £108m (expense ratio 22.0 per cent), producing a combined ratio of 93.4 per cent. The underwriting profit is £32m; investment return on reserves adds further income to the result.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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