Change In Net Premiums Written

What Does Change In Net Premiums Written Mean?

The change in net premiums written refers to the annual percentage of changes to the net premiums written. Insurance companies use this figure to monitor their performance. By calculating this change, they are able to ascertain their ability to support controlled growth from their capital generation.

Insuranceopedia Explains Change In Net Premiums Written

Insurance companies measure their performances in terms of the premiums they write (or collect). The net premiums written refers to the amount of premiums insurance companies retain for assuming risk. In other words, the net premiums written amounts to the sum of premiums that the company writes in a specific period, minus any premiums they pay for reinsurance, and plus any premiums they receive for reinsuring another company.

To calculate the changes in net premiums written, the insurance company calculates the difference in net premiums written from the previous year to the current as a percentage of the former. Typically, an increase would denote more insurance policies written. Similarly, a decrease would indicate that the insurance company wrote fewer policies. This could happen if the insurance company is offering premiums at rates that are not competitive vis-à-vis other insurance companies in the market, or there are a higher number of competitors entering the market offering similar products.