What does Net Preimum rates mean?

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Asked January 25, 2016

1 Answer

Net Premium is after an expense, dividend, loss or commission is deducted from your earnings related to insurance is concerned. The value of the insurance premium is kept by an insurance agency.

Insurance can be calculated in the following manner.

  • Home
  • Auto
  • Health
  • Life insurance

These are the main types of insurance most people look for. The net premium is calculated by taking into account all expenses, commissions, and taxes and salaries. The future expenses that you incur are not calculated when getting a rate on the Net Premium, although expenses must be taken into consideration during a net premium calculation. Some companies can add their expenses, but must make sure they will not create a loss.

The total value of the premium retained by an insurance company is the net written premium that pertains to the insurance company. The reason it is calculated is to find out the amounts of the premium that have been paid by the insurer or your broker. In other words, the health of the brokers and their company's financial status is also measured in this way. If after several years the premium rises and it means that the insurance company is doing well and the business in growing and expanding, although the risk is not 100% under control yet.

If the net premium is declining, then the market is becoming very much pricier competitively. In this case there will also be a decrease in policies regarding the types of profit. These Net Premium rates are solely there to make sure that people understand that particular type of insurance and what a net premium rate is.

Answered January 27, 2016 by fortune202

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