Net Premiums Earned
Updated: 09 June 2023
What Does Net Premiums Earned Mean?
Net premiums earned is the total amount of premiums an insurance company considers “earned” depending on the ratio of how much time has passed on the policy to its effective life. This amount counts as earnings and belong to the insurer.
Insuranceopedia Explains Net Premiums Earned
When a policyholder pays a premium, the insurer does not immediately consider it as an earning. This is because the insurer has not fulfilled their obligation to pay for potential claims upon receiving a premium. The coverage has just started. Thus, only over time as the policy gets closer to its end date, does the premiums paid incrementally become premiums earned. The full premium is considered earned only when a policy reaches it end date.
Related Definitions
Related Terms
Related Articles
Your Credit Score and Your Insurance Premium
The Future of Insurtech: How Technology is Transforming the Insurance Industry
Inside the Details of Auto Transport Insurance: An Expert Interview
Expert Insights: The Ins and Outs of Moving Insurance
Interview With Todd Taylor On Strategizing Large Group Health Insurance
Future Trends in Pain Management Billing and Insurance: Adapting to Change
Related Reading
Revealing the Most And Least Popular U.S. Insurance Companies
How to Get Into the Insurance Industry With a Finance Degree