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:
“Hard times accounted in large part for the fact that the exposition was a financial disappointment in its first year, but Sally Rand and her fan dancers accomplished what applied science had failed to do, and the exposition closed in 1934 with a net profit, which was donated to participating cultural institutions, excluding Sally Rand.”
—For the State of Illinois, U.S. public relief program (1935-1943)
“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)
“It is remarkable that there is little or nothing to be remembered written on the subject of getting a living; how to make getting a living not merely honest and honorable, but altogether inviting and glorious; for if getting a living is not so, then living is not.”
—Henry David Thoreau (1817–1862)