Net Premium Written
Net premiums written is the sum of all types of insurance premiums which a company may collect throughout the whole duration of existing insurance policies minus the costs like agent`s commissions or payments made for reinsurance. It gives an indication of the level of sales for risks that they themselves cover. Although there is a presumption that an insurance company is financially sound when it possesses a positive net premiums written, it is also important to remember that having a negative net premiums doesn’t mean that the company is insolvent and is not capable of providing the benefits promised. The nature and timing of reinsurance transactions or other factors which are present in the process of transactions can affect the net premium written negative, but negative net written premiums can be temporary.
Under accrual-basis accounting, only premiums pertaining to the relevant accounting period are recognized as revenues. These premiums are called net premiums earned.
Read more about this topic: Gross Premiums Written
Famous quotes containing the words net, premium and/or written:
“Mental events such as perceivings, rememberings, decisions, and actions resist capture in the net of physical theory.”
—Donald Davidson (b. 1917)
“In taking out an insurance policy one pays for it in dollars and cents, always at liberty to discontinue payments. If, however, woman’s premium is a husband, she pays for it with her name, her privacy, her self-respect, her very life, “until death doth part.””
—Emma Goldman (1869–1940)
“That night ended the day when history was written in Abilene. August 14, 1865 was the date. That was the end of the first drive on the Chisolm Trail. It was just the first of thousands of such drives bringing beef to the world.”
—Borden Chase [Frank Fowler] (1900–1971)