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P. P/ P& Pa Pc Pd Pe Ph Pi Pl Pm Pn Po Pp Pr Ps Pt Pu Py
Pra Pre Prh Pri Pro Pru

Premium capacity

The total amount of premiums for all exposures that the insurer can safely write in a given period. This figure is also restricted based on state regulations as well as the generally accepted accounting principles applicable to property-casualty (P&C) insurers. The insurer’s written premium to policyholder’s surplus is often calculated to ascertain this capacity. Reinsurance is frequently purchased to assist insurers in this area.

Premium Deposit

When the terms of a policy provide that the final earned premium be determined at some time after the policy itself has been written companies may require tentative or “deposit” premiums at the beginning which are readjusted when the actual earned charge has been later determined.
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When the price of insurance is tied to fluctuating values or costs that cannot be known until the end of the policy period, inventory or payroll are two common examples, a deposit or provisional premium or estimated premium may be charged at the outset of a policy with final adjustment to come at the end of the term.

Premium discount

A discount given to policyholders that pay premiums for one year in advance. This term can also refer to a discount given in some states to holders of workers compensation or general liability policies. This discount is given because of the reduced expense incurred by the insurer on smaller policies.

Premium earned

UK: As premiums are payable in advance it follows that at any one time, e.g. end of the financial year, most policies will have an unexpired term to complete. The premium earned is the pro rata share of the premium relating to the period that has expired.
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Portion of the premium for a single Policy or group of policies, that an Insurer is entitled to recognize as earned revenue because a similar portion of the coverage period has elapsed. For example, under an annual Policy, one-third of the total premium is earned after the first four months of coverage.
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That part of a premium that relates to so much of the period of insurance as has already run.

Premium exemptions

Premiums paid during a person’s lifetime on his own life may be regarded as normal expenditure out of income and therefore exempt from inheritance tax. Such premiums are not ‘normal expenditure’ if an annuity was purchased on his life unless they were not associated operations, i.e back to back. Policies and annuities are not regarded as associated operations if, first, the policy was issued on full medical evidence of the insured’s health, and, secondly, it would have been issued on the same terms if the annuity had not been bought.

Premium Gross

(a) Entire periodic premium for a particular type of Insurance, consisting of the net premium plus loadings (b) Premium for participating Insurance before deduction for anticipated dividends.