Hit ratio (quote-to-bind ratio)
The proportion of quoted risks that result in a contract, an indicator of how an underwriter's price and terms align with the market's, always to be read alongside the profitability of the business won.
The hit ratio compares the number, or premium volume, of risks actually written with the number of risks quoted. It measures how an underwriter's offer aligns with the market. A very low ratio signals a price or terms out of step, too demanding to be accepted, or a deliberate choice to quote only to observe. A very high ratio is more worrying than it looks: it suggests the underwriter wins because it is the cheapest or the broadest, exposing it to adverse selection, with the best risks going to more selective competitors and the weaker ones staying with it. The right ratio thus depends on the line, the cycle and the strategy, and is never read alone. It is analyzed with the rate adequacy of the business won, the composition of business lost and the reasons for losing it, and the retention rate, which measures the loyalty of the existing portfolio. Underwriting systems now record lost quotes and the winning competitor's price when the broker shares it, making it possible to reconstruct the market's demand curve and fine-tune pricing.
Textbook case: a team quotes 400 new risks in the year and wins 60, a ratio of 15 percent. Analysis shows the risks won have average rate adequacy of 92 percent, against 105 percent for those lost: the team mostly wins the risks it underpriced, a sign of adverse selection.
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