IRDAI AM Formula Sheet
Ten formulas, what each one is for, and a worked example.
The IRDAI Assistant Manager exam mixes general quantitative aptitude in Phase I with insurance knowledge in Phase II. These ten formulas cover both: five arithmetic staples and five insurance measures an IRDAI officer works with.
A worked solvency ratio example follows the table.
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The 10 Formulas
1
Formula
Percentage change
Expression
(New − Old) ÷ Old × 100
Use it for
Growth and fall in values, and the base of most DI questions.
2
Formula
Profit %
Expression
(SP − CP) ÷ CP × 100
Use it for
Profit or loss on cost price.
3
Formula
Simple interest
Expression
SI = P × R × T ÷ 100
Use it for
Interest that isn't added back to the principal.
4
Formula
Compound interest
Expression
A = P × (1 + R/100)ᵀ; CI = A − P
Use it for
Interest compounded once a year.
5
Formula
Dividing in a ratio
Expression
Share of A = Total × a ÷ (a + b)
Use it for
Splitting an amount, profit or quantity in a ratio.
6
Formula
Loss ratio
Expression
Incurred claims ÷ Earned premium × 100
Use it for
Share of premium paid out in claims.
7
Formula
Combined ratio
Expression
Loss ratio + Expense ratio
Use it for
Underwriting profit (below 100%) or loss (above 100%).
8
Formula
Solvency ratio
Expression
Available solvency margin ÷ Required solvency margin
Use it for
Insurer's capital strength. IRDAI's control level is 1.5.
9
Formula
Average clause
Expression
Claim = Loss × Sum insured ÷ Value at risk
Use it for
Under-insurance in property claims.
10
Formula
Premium
Expression
Sum insured × Rate
Use it for
Basic premium calculation.
| # | Formula | Expression | Use it for |
|---|---|---|---|
| 1 | Percentage change | (New − Old) ÷ Old × 100 | Growth and fall in values, and the base of most DI questions. |
| 2 | Profit % | (SP − CP) ÷ CP × 100 | Profit or loss on cost price. |
| 3 | Simple interest | SI = P × R × T ÷ 100 | Interest that isn't added back to the principal. |
| 4 | Compound interest | A = P × (1 + R/100)ᵀ; CI = A − P | Interest compounded once a year. |
| 5 | Dividing in a ratio | Share of A = Total × a ÷ (a + b) | Splitting an amount, profit or quantity in a ratio. |
| 6 | Loss ratio | Incurred claims ÷ Earned premium × 100 | Share of premium paid out in claims. |
| 7 | Combined ratio | Loss ratio + Expense ratio | Underwriting profit (below 100%) or loss (above 100%). |
| 8 | Solvency ratio | Available solvency margin ÷ Required solvency margin | Insurer's capital strength. IRDAI's control level is 1.5. |
| 9 | Average clause | Claim = Loss × Sum insured ÷ Value at risk | Under-insurance in property claims. |
| 10 | Premium | Sum insured × Rate | Basic premium calculation. |
Worked Example: Solvency Ratio
An insurer's available solvency margin is ₹1,500 crore and its required solvency margin is ₹1,000 crore.
- 1
Divide
1,500 ÷ 1,000 = 1.5.
- 2
Compare with IRDAI's level
IRDAI's control level of solvency is 150%, or 1.5.
- 3
Read it
The insurer is exactly at the control level, with no cushion above it.
Questions on this syllabus. No signup.
Insurance Ratios Have Fixed Bases
The loss ratio uses earned premium, the expense ratio uses written premium, and solvency compares available with required margin. Most wrong options swap a base.
FAQs
Is Phase I quant like bank exams?expand_more
Yes. It covers the same arithmetic and data interpretation topics.
What solvency ratio does IRDAI require?expand_more
IRDAI's control level of solvency is 150%.
Is the combined ratio tested?expand_more
Insurance ratios are part of the Phase II insurance syllabus, so expect conceptual and simple numerical questions.
Next steps
Take a full IRDAI AM mock testThe 160-question Phase I format, timed and scored.