CPCU 520: Insurance Operations/List of Formulas

  1. Loss Ratio=
    Image Upload 1

  2. Expense Ratio=
    • Image Upload 2
    • (1.22)
  3. Combined Ratio (trade basis)=
    • Image Upload 3
    • (1.22)
    • LAE=Loss Adjustment Expense
  4. Combined ratio(trade basis)(simplified)=
    Image Upload 4(1.22)
  5. Investment Income Ratio=
    Image Upload 5(1.23)
  6. Overall Operating Ratio=
    Image Upload 6(1.23)
  7. Return on equity=
    Image Upload 7(1.23)
  8. Insurer's retention ratio
    The insurer's retention ratio is the percentage of expiring insurance policies that an insurer renews, and it can be measured by policy count, premium volume, or both.(1.24)
  9. Lapse ratio
    The Lapse ratio is calculated by dividing the number of policies that lapse during a period by the total number of policies written at the beginning of that period. A lapse in insurance is defined as a point in time when a policy has been cancelled or terminated for failure to pay the premium,. or when the contract has been voided for other reasons (1.24)
Card Set
CPCU 520: Insurance Operations/List of Formulas
CPCU 520: Insurance Operations/List of Formulas