Definition:Written premium
📝 Written premium is the total amount of premium an insurer records on all policies issued or renewed during a given period, regardless of whether the premium has been collected or the coverage period has begun to run. It stands as one of the most fundamental top-line metrics in the insurance industry — akin to revenue in other sectors — and appears prominently in financial statements, regulatory filings, and rating agency assessments.
📊 The figure captures premium at the moment a policy is bound or renewed, recording the full policy-period amount on the books even if the insurer bills in installments. It differs from earned premium, which recognizes revenue proportionally over the coverage period, and from collected premium, which reflects actual cash received. For example, if an insurer writes a twelve-month commercial property policy on July 1 with a $120,000 premium, the entire $120,000 counts as written premium in that reporting period, while only $60,000 would be earned by December 31. Adjustments for mid-term endorsements, cancellations, and audit premiums flow through as changes to the written figure, meaning it is not purely a static snapshot but a living metric that shifts throughout the year.
💡 Tracking written premium is essential for gauging growth trajectory, market share, and strategic positioning. Underwriters and executive teams monitor written premium by line of business, geography, and distribution channel to identify emerging trends and allocate capital efficiently. Reinsurers use cedents' written premium volumes to structure treaty reinsurance programs and set ceding commissions. Regulators scrutinize the ratio of net written premium to policyholder surplus as a leverage indicator — if a carrier writes too much premium relative to its surplus, it may signal inadequate capitalization. For MGAs and program administrators, reported written premium is often the benchmark against which binding authority capacity limits and performance targets are measured.
Related concepts