expense ratio
The expense ratio is the percentage of premium used to pay all of the costs of acquiring, writing, and servicing insurance and reinsurance.
Additional Information
There are two methodologies to measure the expense ratio: a trade basis, which is when the expense is divided by written premium, and on a statutory basis, which is when the expense is divided by earned premium. Most typically, the ratio is calculated using written premium. Expense ratios are an integral part of retrospective rating basic premiums.
