Expense Ratio
Definition
- A ratio used to determine an insurance company's operating efficiency, determined by comparing the expenses involved in underwriting (including commissions) and the net premiums written. Also known as the "underwriting expense ratio" or the "loss ratio."
Synonyms
cost, fraction, rate, equation, percentage, comparison, relationship, amount, payment
Related Terms and Acronyms
- Account Current (AC) — Acronym, Very Important,
- A ledger summarizing the performance of each agent employed by an insurance company.
➥ A monthly or yearly ledger style report provided by an insurer to an insurance agent detailing policies, premiums, commissions, cancellations, and endorsements. - Developed to Net Premiums Earned — Definition,
- A method used to determine if the premiums charged by an insurer are in balance with the benefits they pay out.
- Loss Ratio — Definition,
- A method of comparing an insurer's losses to premiums earned in a specific period of time.
- Policy Illustration — Definition,
- An outline of how a policy will perform under various conditions over a period of time.
- Premium-to-Surplus Ratio — Definition,
- A method used to determine an insurance company's financial stability.
- Premiums Written — Definition,
- A sum of the premiums from all the policies that a company has written in a given period of time.
- Total Expense Ratio (TER) — Acronym,
- The percentage of monthly debt payments compared to total before-tax income.
- Underwriting Expenses — Definition,
- The expenses accumulated by an insurance company while underwriting a product.
- Underwriting Income — Definition,
- The income earned by an insurer from underwriting in a certain amount of time.
