Protection & Indemnity

Comparative club analysis – underwriting

Individual club underwriting results

Combined ratios are a direct comparison of clubs’ underwriting performance. The 2016/17 net combined ratios for all the clubs are set out in the graph below.

Only two of the 13 IG clubs reported an improvement in their financial year underwriting results, but the average combined ratio for 2016/17 is still a very impressive 93%. The underlying result is even better. If half the market had not rebated premiums in one form or other in the 2016/17 year, the underlying combined ratio for the market would have been 88%.

This ‘underlying’ combined ratio is very close to the 2015/16 market underwriting result, which represented the largest underwriting surplus for at least 25 years (excluding unbudgeted calls).

Highlights

  • Market average combined ratio of 93% (but the underlying result of 88% almost identical to 2015/16)
  • 11 out of the 13 clubs reported underwriting surpluses
  • 2 out of the 13 clubs experienced improvement in underwriting performance since 2015/16 and 2 clubs reported underwriting results almost unchanged
  • Continuing wide variation in underwriting performance between clubs.

Combined Ratio

The combined ratio is essentially the net loss ratio for the club and is defined as follows:

Net combined ratio =

(net incurred claims + operating expenses)
(Premium - reinsurance costs)
  • A combined ratio of 100% represents an underwriting break-even position
  • Anything in excess of 100% would be an underwriting loss
  • A combined ratio less than 100% would represent an underwriting surplus.