Basic Premium
Updated: 12 November 2024
What Does Basic Premium Mean?
A basic premium refers to the portion of the standard premium that is allocated to cover agent commissions and administrative costs.
Insuranceopedia Explains Basic Premium
Insurance companies calculate premiums to cover underwriting costs, agent commissions, future claims, and other expenses or potential losses that may arise from issuing an insurance policy. The insurer adds the basic premium to the pure premium to determine the standard premium.
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