A combined ratio above 100% typically indicates what?

A combined ratio above 100% signifies that an insurer's expenses and losses are surpassing the earned premiums. This is a key indicator of financial performance within the insurance industry, as it represents the cost of claims and operational expenses in relation to the income generated from policies written. When the combined ratio exceeds 100%, it denotes that the insurer is not generating enough premium income to cover these costs, which reflects a financial loss on the underwriting side of the business.

In essence, this ratio is crucial for assessing an insurer's profitability in its core operations, as it provides insight into how well the company manages its underwriting risks and revenue generation. A consistently high combined ratio can signal potential issues with underwriting performance or pricing strategies.