What is the general standard for the ratio of 'Gross Premiums Written to Policyholders Surplus'?

The standard for the ratio of 'Gross Premiums Written to Policyholders Surplus' is typically set around 9 to 1. This ratio is used in the insurance industry as a measure of the capacity and financial health of an insurer. A ratio of 9 to 1 indicates that for every dollar of surplus, the insurer is writing nine dollars in premiums. This level is considered reasonable as it balances the risk taken by the insurer against its available surplus, ensuring that there is enough surplus to cover potential claims.

Surplus lines brokers should be aware of this ratio as it reflects the financial stability of the insurer and can impact the availability of coverage and the terms offered. If an insurer consistently exceeds this standard, it may suggest that the company is over-leveraged with respect to its policyholders' surplus, potentially indicating increased financial risk. Understanding this standard helps brokers assess which insurers are in a sound position to honor claims and maintain solvency.