In 2020, Iceland and the United Kingdom were the only European countries with a combined ratio of more than one for non-life insurance. The combined ratio, which is the sum of claims and expenses incurred divided by premiums earned is a measure of profitability used by insurance companies to see how efficiently they are running their business. The combined ratio can be displayed as a measure of one or as a percentage of 100. Insurance markets with a ratio of more than one means that companies are paying out more in claims than they are receiving through premiums earned.
Combined ratios
The United Kingdom (UK), which is Europe's largest insurance market in terms of gross written premiums, was the only country that saw combined ratios of above one in both life and non-life insurance categories. France and Germany, which make up the remainder of the three largest insurance markets in Europe, saw combined ratios just below one.
SCR Ratio and MCR Ratio
In 2020, the German insurance industry had the highest solvency capital requirement (SCR) ratio in Europe. The United Kingdom (UK), had a SCR ratio half of that of the German insurance sector. In addition to the SCR ratio, insurers must also calculate minimum capital requirement (MCR). The MRC is essentially a tipping point in which, if an insurer falls below, the authorization of an insurer could be withdrawn. Germany had one of the highest MCR ratios in Europe.
Combined ratios for life and non-life insurance in Europe in 2020, by country
As defined by the source "The combined ratio is defined as the sum of claims and expenses divided by premiums earned."
Combined ratios for life insurance were calculated by Statista. Sample includes insurers with financial year end within the calendar year. Exchange rate conversions to EUR using ECB exchange rates as of reference date.
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Statista. (June 9, 2022). Combined ratios for life and non-life insurance in Europe in 2020, by country [Graph]. In Statista. Retrieved September 20, 2024, from https://www-statista-com.ezproxy.canberra.edu.au/statistics/1093855/european-insurance-market-combined-ratios/
Statista. "Combined ratios for life and non-life insurance in Europe in 2020, by country." Chart. June 9, 2022. Statista. Accessed September 20, 2024. https://www-statista-com.ezproxy.canberra.edu.au/statistics/1093855/european-insurance-market-combined-ratios/
Statista. (2022). Combined ratios for life and non-life insurance in Europe in 2020, by country. Statista. Statista Inc.. Accessed: September 20, 2024. https://www-statista-com.ezproxy.canberra.edu.au/statistics/1093855/european-insurance-market-combined-ratios/
Statista. "Combined Ratios for Life and Non-life Insurance in Europe in 2020, by Country." Statista, Statista Inc., 9 Jun 2022, https://www-statista-com.ezproxy.canberra.edu.au/statistics/1093855/european-insurance-market-combined-ratios/
Statista, Combined ratios for life and non-life insurance in Europe in 2020, by country Statista, https://www-statista-com.ezproxy.canberra.edu.au/statistics/1093855/european-insurance-market-combined-ratios/ (last visited September 20, 2024)
Combined ratios for life and non-life insurance in Europe in 2020, by country [Graph], Statista, June 9, 2022. [Online]. Available: https://www-statista-com.ezproxy.canberra.edu.au/statistics/1093855/european-insurance-market-combined-ratios/