Actuarial & Insurance
Intermediate
Combined Ratio
Total cost ratio: losses plus expenses vs premium.
Formula
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MembersVariables
CRCombined ratio
LRLoss ratio
ERExpense ratio
Example
LR=70%, ER=25%: CR = 95% (a 5% underwriting profit)
Did You Know?
A combined ratio below 100% means the insurer profits on underwriting alone, before any investment income.
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