An insurer's combined ratio is a measure of underwriting profitability of the business, calculated as the sum of incurred losses and operating expenses measured as a percentage of earned premium.
A combined ratio above 100% implies an underwriting loss, while a ratio below 100% means an underwriting profit.
A hard market suggests a period of higher premium rates and higher profitability. Therefore, a hard market correlates to a lower combined ratio.
Related: A harder road ahead for Commercial Auto
In commercial auto, the shift toward a harder market has been a long time coming. Competitive pricing alone did not cause the shift to a harder market in commercial cuto. Experts also point to increasing claim severity among a broad range of vehicles, each with their own uses and risks.
Below, a summary of findings about commercial auto's combined ratio:
(Click image to enlarge.)
Related: These infographics tell the story of 2015 in insurance
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