The percentage of all insurance premiums that are used to pay insurance costs, including those associated with costs of acquiring, writing, and servicing insurance and reinsurance. This portion of premiums is related to the overall amount of premiums acquired (written premiums) during a given period.

The expense ratio is measured using two different methodologies: 1) a trade basis expense ratio, which represents expense divided by written premiums; 2) a statutory basis expense ratio, calculated as expense divided by earned premiums (EPs).

Expense ratios form an integral part of the so-called retrospective rating basic premiums (also, retrospective rating plan premiums).