Combined Ratio
The Combined Ratio is a key measurement used in insurance companies to see how well they're doing financially. Think of it like a health score that shows if an insurance company is making or losing money from their main business of selling insurance. It adds up how much money the company spends on claims (like car accident payouts) and running costs (like employee salaries), then compares this to the money they collect from insurance premiums. A ratio below 100% means they're making money, while above 100% means they're losing money on their insurance operations. It's similar to checking a store's profit by comparing their expenses to their sales.
Examples in Resumes
Achieved 15% improvement in Combined Ratio through strategic risk assessment initiatives
Led team responsible for monitoring and analyzing Combined Ratio trends across multiple insurance products
Developed reporting tools to track Combined Ratio performance metrics
Maintained Combined Ratio below industry average through effective underwriting practices
Typical job title: "Insurance Analysts"
Also try searching for:
Where to Find Insurance Analysts
Professional Organizations
Online Communities
Job Boards
Example Interview Questions
Senior Level Questions
Q: How would you develop a strategy to improve a struggling division's Combined Ratio?
Expected Answer: A senior professional should discuss analyzing claims patterns, reviewing underwriting guidelines, evaluating operational costs, and implementing both short-term and long-term solutions while considering market conditions.
Q: How do you use Combined Ratio analysis to make strategic business decisions?
Expected Answer: Should explain how they use this metric to evaluate product performance, pricing strategies, and market expansion opportunities, with examples of past successful decisions.
Mid Level Questions
Q: What factors influence the Combined Ratio, and how would you monitor them?
Expected Answer: Should identify key components like claims frequency, severity, operating expenses, and premium pricing, and discuss regular monitoring methods and reporting tools.
Q: How do you explain Combined Ratio trends to non-technical stakeholders?
Expected Answer: Should demonstrate ability to break down complex data into simple terms and explain the business impact using clear examples and visual aids.
Junior Level Questions
Q: Can you explain what the Combined Ratio is and why it's important?
Expected Answer: Should explain that it's the sum of loss ratio and expense ratio, showing whether the company is making or losing money on its insurance operations, with basic examples.
Q: What does it mean if a Combined Ratio is over 100%?
Expected Answer: Should explain that a ratio over 100% means the company is paying out more in claims and expenses than it's collecting in premiums, indicating underwriting losses.
Experience Level Indicators
Junior (0-2 years)
- Basic understanding of insurance terms
- Data entry and basic reporting
- Simple ratio calculations
- Basic financial analysis
Mid (2-5 years)
- Detailed ratio analysis
- Performance tracking
- Report creation and presentation
- Trend analysis and forecasting
Senior (5+ years)
- Strategic planning based on ratio analysis
- Complex financial modeling
- Team leadership and mentoring
- Business strategy development
Red Flags to Watch For
- Unable to explain basic insurance concepts
- No experience with financial analysis or reporting
- Lack of attention to detail in calculations
- No understanding of insurance industry regulations
Related Terms
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