Average Gross premium

Gross premium / number of exposures

Average net premium

Net premium / Number of exposures

Average Sum insured

Total sum insured / Number of exposures

Allocated loss adjustment expenses(ALAE) 

Correspond to those costs that the insurer is able to assign to a particular claim.

Combined ratio 

Net commission ratio + expense ratio + Net incurred claim ratio

Claim Frequency 

Number of incurred claims / Number of exposures

Claim Severity

Gross (net) lncurred claim amount / Number of lncurred claims

Expense Ratio

Operating expenses / Gross written premium

Exposures

An exposure is the basic unit of risk that underlies the insurance premium

Earned Exposure Year 

Exposure per unit of year of risk coverage.

Insurance profit 

Underwriting profit + investment income on insurance funds

Gross Earned Premium (GEP)

Premium from direct business written + Premium on reinsurance accepted + Adjustment for change in reserve for unexpired risk

Gross Direct premium

Premium received from direct business written (including coinsurance premiums) 

Gross written premium 

Premium from direct business written + Premium on reinsurance accepted 

Gross claims paid 

Claim amount paid on direct business written + Claim amount paid on reinsurance accepted business 

Gross lncurred claim

Claim amount paid (gross) + Claims outstanding (inclusive of IBNR) amount at the end of the Financial Year (gross) - Claims outstanding (inclusive of IBNR) amount at the beginning of the Financial Year (gross)

Gross lncurred Loss Ratio 

Gross incurred claim / Gross earned premium

Gross claims Paid Loss Ratio

Gross claims paid / Gross earned premium

Gross commission 

Commission paid on direct written business + Commission paid on reinsurance accepted business.

Net Earned Premium (NEP) 

Premium from direct business written + Premium on reinsurance accepted - Premium on reinsurance ceded +/- Adjustment for change in reserve for unexpired risk

Net premium 

Premium from direct business written + Premium on reinsurance accepted - Premium on reinsurance ceded

Net claims paid 

Claim amount paid on direct business written + Claim amount paid on reinsurance accepted business -Claim amount received from ceded business

Net Commission

Commission paid with respect to direct business + Commission paid with respect to Reinsurance accepted - Commission received with respect to Reinsurance ceded 

Net lncurred Loss Ratio

Net lncurred claim / Net earned premium 

Net claims paid loss ratio

Net claims paid / Net earned premium 

Net Commission ratio 

Net commission / Net Premium 

Number of lncurred claims

Number of settled claims (i.e. claims are closed with / without payment) + open claims

Premium deficiency reserve 

Premium deficiency shall be recognized if the sum of expected claim costs, related expenses and maintenance costs exceeds related reserve for unearned premium reserve. 

Retention ratio 

Net Written Premium/ Gross Written Premium 

Reporting Delay 

lt is time from when the event occurs through to the time that the insurance company is notified of the event. 

Salvage and subrogation 

Salvage represents any amount that the insurer is able to collect from the sale of damaged property. Subrogation refers to an insurer's right to recover the amount of claim payment to a covered insured from a third-party responsible for the injury or damage.

Settlement Delay

lt is the time period between notification to the Company and the payment of the claim. 

Solvency ratio

ASM / RSM (as per Regulations) - Available Solvency margin / Required Solvency margin

Tail length

Estimated time taken for settlement of claim from the date of loss occurrence.

Underwriting profit

Net earned premium - Net incurred claims + Net Commission - Operating expenses

Unallocated loss adjustment expenses 

are the claim related expenses but cannot be allocated to a specific claim. Examples of ULAE include salaries, rent, and computer expenses for the claims department of an insurer.

Unearned Premium Reserve (UPR)

A reserve for unexpired risks shall be created as the amount representing that part of the premium written which is attributable to, and to be allocated to the succeeding accounting periods

Unexpired Risk Reserve (URR) 

The reserves in respect of the liabilities for unexpired risks and determined as the aggregate of Unearned Premium Reserve and Premium Deficiency Reserve

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