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📊 '''Current accident year combined ratio''' is a key performance metric in [[Definition:Property and casualty insurance | property and casualty insurance]] that measures the profitability of the business written or earned during the current [[Definition:Accident year | accident year]] only, stripping out the impact of favorable or adverse [[Definition:Reserve development | reserve development]] from prior years. While the standard [[Definition:Combined ratio | combined ratio]] blends current-year results with prior-year adjustments — sometimes flattering or obscuring true underwriting performance — the current accident year version isolates how well the insurer is pricing and managing the risks it is taking on right now. This makes it an indispensable analytical tool for [[Definition:Underwriting | underwriters]], [[Definition:Actuarial science | actuaries]], investors, and [[Definition:Rating agency | rating agencies]] seeking an unvarnished view of ongoing book quality.

🔍 Calculating this metric requires separating the [[Definition:Loss ratio | loss ratio]] into its current accident year component and its prior-year development component. The current accident year [[Definition:Incurred losses | incurred losses]] — which include both paid claims and the actuary's estimate of outstanding [[Definition:Loss reserves | reserves]] for events that have occurred but are not yet fully settled — are divided by [[Definition:Earned premium | earned premiums]] to produce the current accident year loss ratio. Adding the [[Definition:Expense ratio | expense ratio]] yields the current accident year combined ratio. Because the loss reserve estimate for the current year is inherently uncertain — particularly for [[Definition:Long-tail | long-tail]] lines like [[Definition:General liability insurance | general liability]] or [[Definition:Professional liability insurance | professional liability]] — this metric carries an actuarial judgment component that can shift materially as claims mature. Markets operating under [[Definition:IFRS 17 | IFRS 17]], [[Definition:US GAAP | US GAAP]], and local statutory accounting standards each define earned premium and incurred loss differently, so cross-jurisdictional comparisons require careful normalization.

💡 Investors and analysts prize this measure because it reveals trends that the calendar year combined ratio may mask. An insurer could report a seemingly healthy calendar year combined ratio of 95% while actually writing current-year business at 102% — the gap being papered over by reserve releases from favorable development on older claims. Conversely, a company might show a poor calendar year result due to reserve strengthening on legacy exposures, even as current underwriting discipline is sound. By focusing on the current accident year figure, stakeholders can evaluate whether [[Definition:Pricing | pricing]] adequacy is improving or deteriorating, assess the impact of recent [[Definition:Rate filing | rate changes]], and benchmark performance against peers on a like-for-like basis. For management teams, tracking this metric by line of business and geography enables faster corrective action when emerging [[Definition:Loss trend | loss trends]] outpace rate.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Combined ratio]]
* [[Definition:Accident year]]
* [[Definition:Loss ratio]]
* [[Definition:Reserve development]]
* [[Definition:Expense ratio]]
* [[Definition:Calendar year]]
{{Div col end}}

Definition:Current accident year combined ratio - Revision history

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