The formulas used in the calculations are:
\[ \text{Loss Expense} = \text{Claim Loss} + \text{Loss Adjustments} \]
\[ \text{Combined Ratio} = \frac{\text{Loss Expense} + \text{Underwriting Expense}}{\text{Total Premiums}} \times 100 \]
This calculator computes the combined ratio for an insurance company based on the input values of total premiums, claim loss, loss adjustments, and underwriting expense. The combined ratio is a measure of profitability used by insurance companies to gauge their overall underwriting performance.
Let's assume the following:
Calculate the loss expense:
\[ \text{Loss Expense} = 4,500,000 + 2,300,000 = 6,800,000 \]
Calculate the combined ratio:
\[ \text{Combined Ratio} = \frac{6,800,000 + 1,200,000}{12,000,000} \times 100 = 66.67\% \]
Therefore, the combined ratio for this example is 66.67%.