Free combined ratio calculator
Enter an insurer's incurred losses, underwriting expenses and earned premium — or the loss ratio and expense ratio directly — to get the combined ratio and the underwriting profit or loss margin, updated live, as you type.
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Estimate based on the values you enter. Not accounting, investment, or insurance advice.
Results are estimates. Consult a professional.
What is the combined ratio?
The combined ratio is the single number property and casualty (P&C) insurers use to judge whether their core insurance business is making money. It measures the cost of doing business — the claims they pay plus the expenses of running the book — against the premium they earn. Expressed as a percentage, a combined ratio below 100% means the insurer kept more in premium than it spent on claims and expenses, so the underwriting itself turned a profit. Above 100% means the insurer paid out more than it took in and is relying on investment income to come out ahead. This combined ratio calculator returns the figure the moment you enter the losses, expenses and premium — or the loss ratio and expense ratio directly.
The combined ratio formula explained
There are two equivalent ways to reach the combined ratio, and a good combined ratio calculator accepts either. You can add the two component ratios, or you can divide total underwriting cost by earned premium in one step. Both give the same answer because they use the same numbers.
- Loss ratio. Take incurred losses plus loss adjustment expense (LAE) and divide by earned premium. This is the share of every premium dollar that goes to claims.
- Expense ratio. Take underwriting expenses — commissions, salaries, overhead and premium taxes — and divide by premium. (Some carriers divide expenses by written premium instead; the choice changes the figure slightly, so be consistent.)
- Add them. Loss ratio plus expense ratio is the combined ratio. The underwriting margin is simply 100% minus that total.
What you need to enter
The calculator offers two modes. Pick whichever matches the numbers you have in front of you — both produce the same combined ratio.
- Dollar amounts mode. Enter incurred losses (including LAE), underwriting expenses, and earned premium. Use figures from the same period, typically a fiscal year, drawn from an insurer's statutory annual statement or income statement.
- Ratios mode. If you already know the loss ratio and expense ratio as percentages — for example from a 10-K, an investor presentation, or a rating-agency report — type them in directly and the calculator adds them.
- Earned vs. written premium. The loss ratio is almost always measured against earned premium. Expense ratios are sometimes measured against written premium; if you mix the two bases the combined ratio will be off, so keep the denominator consistent.
A worked example using the combined ratio calculator
An insurer earns $100 million in premium for the year. It pays $66 million in incurred losses including LAE and spends $28 million on underwriting expenses. What is its combined ratio?
Step 1 — Loss ratio
Losses plus LAE divided by earned premium: $66M ÷ $100M = 66%. Two-thirds of every premium dollar goes to claims.
Step 2 — Expense ratio
Underwriting expenses divided by earned premium: $28M ÷ $100M = 28%.
Step 3 — Combined ratio and margin
Add the two: 66% + 28% = 94%. The underwriting margin is 100% − 94% = 6%.
What a combined ratio below or above 100% means
The 100% line is the whole point of the metric. It separates underwriting profit from underwriting loss. Here is how to read where a result falls.
| Combined ratio | Underwriting margin | What it means |
|---|---|---|
| Below 100% (e.g. 94%) | Positive (+6%) | Underwriting profit — premiums covered claims and expenses with room to spare. |
| Exactly 100% | Zero | Break-even on underwriting before any investment income. |
| Above 100% (e.g. 110%) | Negative (−10%) | Underwriting loss — overall profit depends on investment income covering the gap. |
A combined ratio above 100% is not automatically a problem: insurers earn investment income on the float they hold, so a carrier can run above 100% and still post an overall profit. The combined ratio itself does not take investment income into account. Source: NAIC and the Insurance Information Institute.
Who uses the combined ratio and why
- Insurance executives and actuaries use it to judge whether a line of business is priced to make money on its own, independent of the investment portfolio.
- Investors and analysts compare combined ratios across carriers and over time — a consistently sub-100% ratio signals disciplined underwriting.
- Rating agencies (AM Best, S&P, Moody's) fold the combined ratio into financial-strength ratings that affect an insurer's cost of capital.
- Regulators watch it as one indicator of solvency and pricing adequacy in statutory filings.
Common mistakes and gotchas
- Mixing premium bases. Loss ratio on earned premium but expense ratio on written premium produces a number that is not a true combined ratio. Keep one denominator.
- Forgetting LAE. The loss ratio should include loss adjustment expense, not just paid claims. Leaving it out understates the combined ratio.
- Reading it as the whole story. The combined ratio excludes investment income by design. A figure above 100% does not mean the company lost money overall.
- Comparing across very different lines. A long-tail line such as workers' compensation behaves differently from a short-tail line such as property; combined ratios are most meaningful compared like-for-like.
Combined ratio definitions
How accurate is this combined ratio?
The arithmetic is exact — the combined ratio is a straightforward sum of two ratios. What varies is how the underlying figures are defined. Carriers differ on whether expenses are measured against written or earned premium, on how LAE is allocated, and on whether policyholder dividends are included, so a published combined ratio may use slightly different conventions than the one you compute here.
Treat this as an analytical estimate that mirrors how the NAIC and the Insurance Information Institute define the combined ratio. For a specific carrier, read the basis stated in its statutory annual statement or 10-K — that is the figure regulators and rating agencies rely on.
Insurance Information Institute — Financial Reporting (combined ratio definition and underwriting profit/loss).NAIC — Glossary of Insurance Terms (combined ratio = loss ratio + expense ratio).Frequently asked questions about the free combined ratio calculator
About this Combined ratio calculator
This combined ratio calculator runs entirely in your browser — the figures you enter are never sent anywhere. It adds the loss ratio and the expense ratio (or divides total claims and expenses by earned premium) and recomputes the combined ratio and underwriting margin the instant you change a field. Switch between dollar amounts and ratio percentages to match the numbers you have.
It is one of our free insurance calculators — browse the full shelf, or see every tool in the complete calculators directory.