The combined ratio is the most basic measure of insurance company and industry profitability. It measures the claim costs plus expenses over total earned premium. A ratio under 100 indicates the industry collected more than it paid. A ratio over 100 indicates that the industry paid out more than it collected. The industry’s complete financial picture also includes investment returns, equity levels, and other considerations, however the combined ratio provides a consistent benchmark. The 2023 deterioration, on top of an underwater result in 2022 has resulted from many factors including increases in costs of repair, medical costs, and natural disasters. This along with an increase in large verdicts shapes the outlook for rate needs in 2024. Read additional details from the Insurance Information Institute.