Written Premium refers to the total sum of money that an insurance company records as premium for the policies it has issued during a particular period, prior to deductions for premiums ceded to reinsurers. This amount is determined based on the agreed contractual obligations between the insurer and the policyholder.
Key Components
- Contract Widgets: Refers to how much charge is calculated based on the contractual agreement. It often considers factors like estimated risk, the scope of coverage, and policy benefits.
- Policyholder’s Responsibilities: The agreement on how much the policyholder will pay for coverage even before the occurrence of any insured event.
Importance in Insurance Industry
Written premiums are fundamental in assessing the performance of insurance companies. They indicate the firm’s ability to attract and retain customers through its offered benefits and pricing competitiveness.
For detailed validation of written premium practices and its effect on economy, consider reviewing relevant sections of federal or state legislation and texts such as the Insurance Information Institute, or specific acts like the National Association of Insurance Commissioners’ Model Laws.
Further Reading and Regulations:
- Delve deeper into the concept at the Insurance Information Institute (iii.org) for articles and resources related specifically to understanding premiums implications.
- Consider reviewing “Title 12 of the United States Code for insights into Government regulations” which includes standards and practices surrounding financial reporting in the insurance sector.
In essence, the written premium is both a measure of an insurance company’s revenue from direct business and an indicator of market acceptance through the policy sales prior to any reinsurance impact.
