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Written Premium


Written Premium is a term used in insurance to describe the total amount of premiums due in a specific period for all policies issued by an insurer. This includes both earned and unearned premiums. It provides a measurement of an insurance company’s growth and profitability potential.


The phonetics of “Written Premium” is: /ˈrɪtn ˈpriːmiəm/

Key Takeaways

  1. Definition and Value: Written Premium refers to the total premium, without any deductions, that is due to an insurer from a policyholder for certain insurance policy periods. It demonstrates the potential revenue earned by the insurance company.
  2. Importance in Assessing Company’s Financial Health: The amount of written premium is crucial in assessing the company’s financial health. It reflects the company’s potential profitability and growth over a set period. The higher the written premium, the more revenue the insurer is likely to generate.
  3. Impacts Risk Management: Written Premium also plays a key role in risk management. It allows insurance companies to understand their exposure and manage risks better by determining the adequate amount of reserves to maintain to cover potential claims. Therefore, effective control and management of written premiums could mean higher profit stability for the insurer.


Written Premium is a crucial term in the business/finance industry, specifically in insurance, as it refers to the total premium amount that an insurance company can expect from all policies written (issued) within a specified period. The written premium amount paints a picture of an insurance company’s growth, stability, and profitability. Higher written premiums suggest more business development with an increase in policyholders. These premiums are an essential source of income for insurance companies, which use these funds to cover claims and operational expenses, and any excess contributes to the company’s profit. Therefore, regularly monitoring written premiums can provide insights into the insurance company’s financial health and its ability to meet its obligations.


The term “Written Premium” in finance and business primarily relates to the area of insurance. It denotes an important key performance indicator that insurance companies use to measure revenue from policies underwritten during a specific period. This serves as a pivotal component of an insurance company’s business model as it represents the gross revenue that the company generates from writing insurance policies.Written Premium plays a crucial role in providing valuable insights about an insurance company’s operational efficiency and business health. It indicates how effective an insurer is at obtaining and maintaining its customer base. This revenue directly correlates with the volume and value of insurance coverages provided to policyholders within a given period. Moreover, the trend in Written Premium over time can provide an overlook on whether the company is expanding, contracting, or maintaining its market share. It is also used when comparing the performance of insurance companies to each other or within different periods of the company’s own operation.


1. Auto Insurance: When a customer applies for car insurance, they are quoted a price or premium for the insurance policy. Once the customer agrees to the policy and signs the agreement, that price is considered the ‘written premium’. This fee guarantees coverage for a set term, usually six months to a year.2. Homeowner’s Insurance: An individual purchasing a home chooses to use an insurance company to protect their property. The amount of money the insurance company charges the homeowner for the term of the policy is the written premium, and it offers protection against specific losses such as fire or theft.3. Health Insurance: If a business decides to offer health insurance benefits to their employees, they will often partner with an insurance company. That company will set an amount to be paid, known as the written premium, for the specific term. This ensures that the employees receive the agreed-upon health coverage for that term.

Frequently Asked Questions(FAQ)

What is a Written Premium?

A written premium is an insurance policy term that refers to the total premium amount the insurer is entitled to receive from the policyholder. This can include both the portion the insurer keeps and the portion they cede to a reinsurer.

How is a Written Premium calculated?

The written premium calculation is generally the product of the policy’s rate and its exposure basis. The exposure basis may vary based on the insurance type. For example, it could be total assets for property insurance and payroll expenses for worker’s compensation insurance.

Is there any difference between Written Premium and Earned Premium?

Yes, there is a significant difference between these two terms. A written premium represents the total premium payable by the policyholder in a specific period. In contrast, an earned premium is the part of the written premium that the insurer has ‘earned’ by covering the risk during the policy period.

What does Unearned Written Premium mean?

Unearned written premium refers to the portion of the written premiums that corresponds to the insurance coverage that will be provided in the future. It’s the part of the written premium that the insurer hasn’t earned yet.

How does Written Premium affect the financial statement of an insurance company?

The amount of the written premium directly affects the revenue of an insurance company. High written premiums indicate the better financial health of the company, as it shows the company is accepting more insurance risks and receiving higher premiums in return.

Related Finance Terms

  • Underwriting: The process where insurers assess the risk and exposures of potential clients.
  • Policyholder: The individual or entity who owns the insurance policy.
  • Insured Risk: The risk or loss covered under the insurance policy.
  • Insurance Premium: The amount paid periodically to the insurance company by the policyholder for covering his risk.
  • Actuarial Analysis: The use of mathematical and statistical methods to assess risk in insurance, finance and other industries.

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