Loss ratio, expense ratio and the combined ratio
Attritional and catastrophe losses, expenses, result.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: loss ratio, expense ratio and the combined ratio.Updated 30 October 2026
What it does
The underwriting scorecard. Claims incurred are earned premium times a loss ratio split into attritional losses (the everyday claims) and large or catastrophe losses (the lumpy ones), plus or minus development on older years. Acquisition costs are commissions; administration is largely fixed. Claims over earned premium is the loss ratio, expenses over earned premium the expense ratio, and their sum the combined ratio: below 100% the underwriting makes money before a dollar is invested.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 34–39: Motor: attritional loss ratio, base, Motor: large losses, % of net earned premium, Property: attritional loss ratio, base, Property: catastrophe losses, % of net earned premium…
- Assumptions, rows 56–60: Motor: acquisition costs, % of net earned premium, Property: acquisition costs, % of net earned premium, Liability: acquisition costs, % of net earned premium, Administration expenses, FY0A…
- Claims, rows 6–7: Attritional loss ratio adjustment, selected scenario, Catastrophe multiplier, selected scenario
- Claims, rows 10–12: Motor: attritional loss ratio, Motor: large losses, % of earned premium, Motor: current-year claims incurred
- Claims, rows 21–23: Property: attritional loss ratio, Property: catastrophe losses, % of earned premium, Property: current-year claims incurred
- Claims, rows 32–34: Liability: attritional loss ratio, Liability: large losses, % of earned premium, Liability: current-year claims incurred
- Underwriting, rows 6–13: Net earned premium, Current-year claims incurred, Prior-year development, Claims incurred…
- Underwriting, rows 16–26: Attritional loss ratio, Large and catastrophe loss ratio, Prior-year development, Loss ratio…
- Underwriting, rows 29–38: Motor: net earned premium, Property: net earned premium, Liability: net earned premium, Motor: loss ratio…
What a reviewer looks for
- One loss ratio for every line, hiding the catastrophe load in property.
- Reserve releases mixed into the current-year ratio without being shown.
- Every expense a share of premium, which hides the fixed costs that make scale matter.