What Does Net Premiums Written Mean?
Net premiums written refers to the amount of money an insurance company receives from premiums that policyholders pay after the company has subtracted what it needs to pay for reinsurance or commissions. It usually refers to the premiums written over a period of time, such as a year. Money from this sum is what the insurance company will use to pay out any approved claims.
Insuranceopedia Explains Net Premiums Written
Net premiums written can be used as an evaluation tool to rate how well an insurance company is doing. If an insurer experiences a high amount for net premiums written, then this means that it is making substantial profits. Similarly, if this number is low, then it could mean the company is losing revenue somewhere or assuming too many risks. Moreover, increases in net premiums written from year to year mean that the company is growing. This is a good sign for insurance companies who are trying to expand their business. Decreasing net premiums from year to year mean that profits are shrinking, which can serve as a warning sign.