Premiums Written

Premiums Written

Premiums written refer to the total amount of premium that is calculated and recorded as insurance revenue on the insurance company’s balance sheet for policies issued over a specified period, generally over a fiscal year or quarter. This insurance term is critical for evaluating the performance and health of an insurance company.

Key Points to Understand About Premiums Written in Insurance:

• Definition: It encompasses the total amount of premiums from all the policies or contracts issued by an insurer in a designated time period.

• Purpose: Premiums written quantifies the new business acquired by an insurance company within a given period, acted as an important indicator of the company’s income and potential growth.

• Implications: The figure is used by analysts to gage the size and market reach of an insurer, and compare its growth year over year or to other insurers in the same market.

Relevant Regulations and Standards:

Understanding premiums written is enhanced by knowledge of certain financial and insurance-related guidelines and standards applicable such as:

• The National Association of Insurance Commissioners (NAIC) outlines standards and provides guidelines that include reporting of premiums written by insurers.

• Insurance financial statements and their interpretations usually follow frameworks such as International Financial Reporting Standards (IFRS), or standards issued by the Financial Accounting Standards Board (FASB), particularly noting details under FASB’s ASC 944: Financial Services—Insurance.

Practical Uses:

• Historical Comparison: It allows analysts and stakeholders to review historical performance trends.

• Performance Metrics: As a essential financial metric, this figure is often embedded in financial models and forecasts to estimate future financial health and stability.

• Internal Reporting and Analysis: Frequently used in quarterly or annual statements as part of comprehensive financial analysis.

This glossary entry is sourced from standard insurance literature and includes insights based on the application of various financial reporting regulations.