Synthetic fund cost rate
The core data used by insurance companies to calculate operating costs include various expenses such as company operation and compensation. When the comprehensive cost ratio is 100%, it means that revenue and expenditure are equal, and there is no underwriting profit or underwriting loss. The comprehensive cost rate, including payout ratio and expense rate, is the main standard to measure the profitability of the property insurance industry. The lower the comprehensive cost ratio, the stronger the profitability of property insurance companies.
In short, you can understand that the comprehensive cost includes
1. Operating cost (including comprehensive necessary expenses such as policy cost/labor cost)
2. Commission
3. Actual and estimated compensation costs
If the sum of the above items is equal to the premium due, then the comprehensive cost rate is 100%, and the company will not make money.
The so-called comprehensive payout ratio is because the comprehensive cost rate depends on the level of payout ratio when the operating cost and commission are fixed. See?