The premium to surplus ratio is used to measure the capacity of an insurance company to underwrite new policies. The greater the policyholder surplus, the greater assets are compared to liabilities. In insurance parlance, liabilities are the benefits that the insurer owes its policyholders.
What does capacity mean on an insurance form?
What is capacity? Capacity is the legal authority that entitles you to claim proceeds. If you are claiming on your own behalf, you are an individual claimant and should indicate your capacity as Individual. Do not use any other title unless you are actually claiming in that capacity.
What is a good combined ratio in insurance?
A healthy combined ratio in insurance sectors is generally considered to be in the range of 75% to 90%. It indicates that a large part of the premium earned is used to cover the actual risk.
What is underwriting capacity?
What Is Underwriting Capacity? Underwriting capacity is the maximum amount of liability that an insurance company agrees to assume from its underwriting activities. Underwriting capacity represents an insurer's ability to retain risk.