OpsDog KPI Reports

Underwriting Expense
Ratio (P&C)
Benchmarks, Definition & Measurement Details

M P L E A
SA & D AT
E N T
CO NT

2017 Edition www.opsdog.com info@opsdog.com 844.650.2888

Underwriting Expense Ratio (P&C)
Definition & Measurement Details

What is Underwriting Expense Ratio (P&C)?

The total cost incurred by the company related to selling, underwriting, onboarding and maintaining (i.e., customer service) property and casualty (P&C)
insurance policies divided by total P&C premium earned over the same period of time, as a percentage.

Why should this KPI be measured? How is this KPI calculated?

P&C Insurance Underwriting Expense Ratio measures total company Two values are used to calculate this KPI: (1) the total cost of selling,
operating expenses (not including claims losses or loss adjustment

T E N T
underwriting and servicing P&C insurance policies (i.e., total operating

CON
expense) relative to total P&C premium earned over the same period expense) over a certain time period, and (2) total P&C premium earned

tails!
of time. Aside from paid losses (i.e., claims paid out), the majority over the same period of time. The total cost of selling, underwriting and

G E D e n t De
RID
of insurance company expenses are tied up in sales (i.e., agency servicing policies is comprised primarily of costs (labor and all other
as u r e m
AB ition & Me
operations, direct channel sales, etc.), underwriting and customer service overhead) related to the insurance company’s sales force (i.e., agency

F u ll De fin
operations. A relatively high value for this KPI may be a lagging indicator management, commissions, direct channel management, etc.), customer

se to V i e w
of several issues: ineffective sales strategies or targeting methods, service operations (i.e., call center, etc.) and all other internal functions
Purcha
low-producing agents and sales staff, highly manual and inefficient
underwriting processes, and poor customer retention can contribute
supporting the business (i.e., underwriting, information technology, HR,
etc.). Total claims paid out and loss adjustment expense (LAE) should not
to higher than average operating costs. Keeping operating costs to a be included in the numerator for this calculation. Include only costs and
minimum is vital for insurance firms, as they rely on investment of excess premiums earned related to P&C insurance in this calculation.
capital to maintain profitability, cover claims payments and develop
distribution channels.

Related KPIs Formula

Combined Ratio (P&C), Loss Ratio (P&C) (Total P&C Operating Expense / P&C Premium Earned) * 100

1
opsdog-kpi-report.underwriting-expense-ratio.Sample 2017 Edition | © OpsDog, Inc.
Underwriting Expense Ratio (P&C)
Benchmarks & Characteristics of High Performers

Underwriting Expense Ratio (P&C)

(Total P&C Operating Expense / P&C Premium Earned) * 100

XX Characteristics of High Performers

XX
• KPIs are well-defined, tracked and tied to
XX performance reviews
• Robust self-service options for customer
XX

NT
(online FAQs, etc.)
XX

N T E • Agents cross-trained to handle and resolve

CO
multiple call types

P L E i n g Da ta!
SAM h m a r k • KPIs are well-defined, tracked and tied to

tual Benc
XX agent performance reviews
w Ac
XX

r c h a s e t o Vie Avg (XX)

XX Pu
XX
Sample Size: XX
XX XX KPI Type: XX
XX XX
Unit: XX
XX Is High or Low Best?: XX
High Performers Low Performers

How to read this chart: This chart summarizes the performance gaps between high (Top 5%), mid
(Median) and low (Bottom 5%) performers for this Key Performance Indicator (KPI). For example, the
column labeled “Top 5%” represents a company that outperformed 95% of the peer group observed
for this metric.

2
opsdog-kpi-report.underwriting-expense-ratio.Sample 2017 Edition | © OpsDog, Inc.
Benchmarking Report Terms & Conditions
OpsDog KPI Reports

© 2017 OpsDog, Inc.

The OpsDog KPI Reports and their contents are protected by copyright laws, contain the
trademark OpsDog, Inc., and are OpsDog’s proprietary information. No part of this book shall be
reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical,
photocopying, recording or otherwise, without written permission from OpsDog, Inc.

OpsDog, Inc. assumes no liability with respect to the use of the information contained herein
which is provided “as is” and there are no warranties of any kind provided by OpsDog with
respect to this report. OpsDog assumes no responsibility for errors or omissions and will not be
liable for any damages resulting from the use of the information contained herein.

OpsDog, Inc.
1502 Augusta Dr., Suite 200
Houston, TX 77057
Tel: 844-650-2888

3
opsdog-kpi-report.underwriting-expense-ratio.Sample 2017 Edition | © OpsDog, Inc.