# Benefit Ratio

Policy benefits and claims as a percentage of premiums.

## Definition

Policy benefits (claims, payouts and reserve changes) divided by premiums earned. Life insurers and composites mix long-term business into their costs, so a combined ratio would mislead; this is the underwriting measure we can compare.

## Formula

(Policy Benefits ÷ Premiums Earned) × 100

## Why it matters

A rising benefit ratio means claims and payouts eat a bigger share of premiums. For life insurers it also moves with investment returns credited to policyholders, so read it as a trend, not a level.

## How Standard Equity uses it

Shown in place of the combined ratio for life insurers, composites and insurers without an underwriting cost line. Lower is better.

## The metric

| Category   | Insurance      |
| ---------- | -------------- |
| Unit       | %              |
| Applies to | Insurance only |

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