SAP for Insurance Blogs
Discover expert analysis and practical tips to optimize your operations and enhance customer experiences with SAP solutions for the insurance industry.
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Loss ratio :
A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums being consumed by losses.

Expense ratio :
An insurer's incurred underwriting expenses for a given period divided by its written premiums for the same period.

Combined ratio :
A profitability ratio that indicates whether and insurer has made and underwriting loss or gain.

Investment income ratio :
Net investment income divided by earned premiums for a given period.

Overall operating ratio :
Is the combined ratio minus the investment income ration and can be used to privide an overall measure of the financial performance of an insurer for a specific period.

Formulas :
Loss ratio = Incurred losses (including loss adjustment expenses) / Earned premiums
Expense ratio = Incurred underwriting expenses / Written premiums
Combined ratio = Loss ratio + Expense ratio
Overall operating ratio = Combined ratio - Investment income ration

SAP UI5 Example:

Below there is a link with a ui5 program created to demo the ui5 capabilities of the sap ui5 library in java script.
The simulation is done on JSON models, which can be filled in by odata content.

The business scenario is related to reporting on important insurance ratio like loss ratio, expense, combined, in order to identify underwriting gain or loss and to take measures towards business growth.
High level action interpretation for ratios is generated.