Premiums written show the total amount of insurance premiums an insurer generates from policies issued during a specific time period.
If you’ve ever looked at an insurance company’s financial report or read insurance news, you may have seen the term premiums written. It sounds like something meant only for accountants, but the idea behind it is actually very simple.
Premiums written tell us how much new business an insurance company has brought in over a certain period, such as a month, quarter, or year.
Understanding Premiums Written in Plain Language
When an insurance company sells a policy, it “writes” that policy. The premium attached to that policy becomes part of the company’s premiums written.
In short, premiums written are the total premiums generated from all insurance policies issued during a specific period, regardless of when coverage starts or how long it lasts.
This number is often used to measure an insurer’s sales activity and growth.
A Simple Example to Make It Clear
Let’s say an insurance company sells the following policies in one month:
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A car insurance policy with a $600 annual premium
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A home insurance policy with a $1,200 annual premium
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A business policy with a $2,200 annual premium
Even if these policies start on different dates or are paid monthly, the total premiums written for that month would be $4,000.
That’s because premiums written focus on when the policy is sold, not when the coverage is used.
Why Premiums Written Are Important
Premiums written are a key metric in the insurance industry. They help insurers, investors, and regulators understand how the company is performing.
Here’s why they matter:
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They show how much business the insurer is bringing in
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They help track growth from one period to another
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They reflect demand for the insurer’s products
If premiums written are increasing, it usually means the company is selling more policies or offering higher-value coverage.
Premiums Written vs. Premiums Earned
It’s easy to confuse premiums written with premiums earned, but they measure different things.
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Premiums written: Premiums from policies sold during a period
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Premiums earned: The portion of premiums tied to coverage that has already been provided
For example, a one-year policy written today counts fully as premiums written right away. However, premiums earned from that policy will be recognized gradually over the year as coverage is provided.
Both numbers are important, but they tell different parts of the financial story.
Gross Written Premiums and Net Written Premiums
You may also hear about gross written premiums and net written premiums.
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Gross written premiums include the total value of all policies written before deductions.
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Net written premiums subtract amounts passed to reinsurers (other insurers that share the risk).
This distinction helps show how much risk the insurer is actually keeping.
How Premiums Written Affect Policyholders
For everyday policyholders, premiums written don’t directly change what you pay. However, they do offer insight into the insurer’s health.
A company with stable or growing premiums written may be expanding and attracting customers. This can be a sign of financial strength, though it should always be considered alongside other factors.
Real-Life Situations Where Premiums Written Matter
Premiums written often come up when:
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Comparing insurance companies
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Reviewing annual insurance reports
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Evaluating market trends in insurance
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Assessing how well a company’s products are selling
They help paint a big-picture view of how active an insurer is in the market.
Why Understanding Premiums Written Is Helpful
Even if you’re not analyzing financial statements, understanding premiums written gives you a clearer view of how insurance companies operate. It shows that insurance isn’t just about claims—it’s also about managing growth, risk, and long-term stability.
Premiums written are one of the basic building blocks behind the scenes, helping insurers track success while continuing to provide protection to their customers.
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