Ratio of underwriting expenses to premiums, measuring the share of premium absorbed by operational and distribution costs.
The expense ratio measures operational efficiency by relating underwriting expenses (commissions, acquisition costs, administrative expenses) to premiums. Combined with the loss ratio it forms the combined ratio. A high ratio may signal a costly distribution channel, insufficient scale or heavy administrative overhead. It varies by line and channel: direct 15–25%, brokerage 30–40%. The calculation basis matters: earned premiums in Europe, written premiums under US convention (trade basis). Always state the basis when comparing.
Expenses 280,000 EUR / earned premiums 1,000,000 EUR = 28% expense ratio. With 75% loss ratio, combined ratio = 103%.
ratio de frais, ratio de coûts, cost ratio, underwriting expense ratio