Earned Premium

evan · Posted: Sat Jul 08, 2006 5:53 am Post subject: Earned Premium

Earned Premium

The portion of premium that applies to the expired part of the policy period. Insurance premiums are payable in advance but the insurance company does not fully earn them until the policy period expires.

Raveendran · Posted: Thu Dec 21, 2006 6:38 am Post subject: Earned Premium calculation

Please explain the differences in the 'earned premium' using the 1/24th method or the 1/365th method.

Thomas Bracken · Posted: Fri Dec 22, 2006 8:09 am Post subject: explanation!

hey !
its a real good one to discuss..
Today, I truly feel glad to say that the with advent of the computers it has become a real easy thing for us to calculate by grouping the premiums as per the time-frame to cover and the month of writing. The method is called the "twenty-fourths" method. We have taken it in a way that for a certain month the premium receipts written would be dispersed after passing half of each month thereby ensuring an identical business for each fortnight (Avg. Due date for each month would be 15th).
Thus an annual premium of FF2400 recorded on 25 July would be brought forward as- 2400x13/24=1300. Hope you got that in a better way now. Thanks, Thomas Bracken.

Earned Premium

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