Combined Ratio Calculator

What Is a Combined Ratio?

The combined ratio is a key metric used in the insurance industry to measure an underwriter's profitability. It represents the total of claims paid (losses) and operational expenses relative to the premiums earned. A combined ratio below 100% indicates an underwriting profit, while a ratio above 100% signals a loss.

This calculator simplifies that analysis by taking two core inputs—your loss ratio and your expense ratio—and summing them to produce the combined ratio instantly.

How the Combined Ratio Is Calculated

The formula is straightforward:

Combined Ratio = Loss Ratio + Expense Ratio

• Loss Ratio — The percentage of premiums used to pay claims and claim-adjustment expenses.
• Expense Ratio — The percentage of premiums consumed by operational costs (salaries, rent, commissions, etc.).

Both ratios are expressed as percentages. For example, a loss ratio of 65% and an expense ratio of 30% produce a combined ratio of 95%.

How to Use the Calculator

1. Enter your Loss Ratio as a percentage (e.g., 65 for 65%).
2. Enter your Expense Ratio as a percentage (e.g., 30 for 30%).
3. The combined ratio is calculated automatically.

No additional inputs are required. The result updates in real time as you adjust either value.

Understanding the Result

The output is a single percentage value. Here is how to interpret it:

• Below 100% — The insurer is generating an underwriting profit. Premiums collected exceed the sum of claims and expenses.
• Exactly 100% — Break-even. Premiums exactly cover losses and expenses, with no underwriting profit or loss.
• Above 100% — Underwriting loss. Claims and expenses exceed premiums collected.

Note that the combined ratio does not include investment income. An insurer with a combined ratio above 100% may still be profitable overall if investment returns offset the underwriting loss.

Common Mistakes When Calculating the Combined Ratio

• Using decimal values instead of percentages. If your loss ratio is 0.65, enter 65, not 0.65. The calculator expects percentage inputs.
• Confusing the combined ratio with the loss ratio alone. The combined ratio always includes both loss and expense components. Using only the loss ratio understates total costs.
• Ignoring policyholder dividends. Some combined ratio formulas include policyholder dividends as an additional component. This calculator uses the standard two-component method (loss ratio + expense ratio).

Practical Use Cases

• Insurance underwriting analysis — Evaluate whether a specific line of business is profitable.
• Portfolio performance review — Compare combined ratios across different insurance products or time periods.
• Financial reporting — Quickly compute the combined ratio for quarterly or annual reports.
• Reinsurance assessment — Determine if a ceding insurer's underwriting results are sustainable.