The Insurance Performance Measure : Bringing Value to the Insurance Industry

The performance of the property and casualty (P&C) insurance industry has suffered in recent years (as of the early 2000s), even prior to the losses incurred in the tragic events of September 11th. Part of the industry’s difficulties stem from its focus on premium generation, as measured by the underwriting or combined ratio, at the expense of overall economic performance. Significantly, the underwriting ratio is an incomplete measure of P&C performance as it ignores investment results and either ignores or embeds ceded reinsurance results. In this paper, we introduce the Insurance Performance Measure (IPM), which is a comprehensive P&C economic profit measure. Note: the downloadable document is an unbranded working paper version of the paper