Additional premium amount in which the standard Medicare Part B premium goes up 10% for each full 12-month period (beginning with the first month after the end of the beneficiary’s initial enrollment period) in which the beneficiary could have had Medicare Part B but did not take it. There is also a surcharge for Medicare Part D.
Insurance Encyclopedia
Premium tax
Government- or state-imposed fee based on the net premium income collected in a jurisdiction by an insurance company.
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A tax, imposed by each state, on the premium income of insurers doing business in the state.
Premium to surplus ratio
An insurance company’s surplus, the equivalent of capital and retained earnings or net worth for a manufacturing company, is the amount by which assets exceed liabilities. It provides a cushion for absorbing above-average losses. The premium to surplus ratio is designed to measure the adequacy of this cushion or the company’s financial strength. The ratio is computed by dividing net premiums written by the surplus. A company that has $2 in net premiums written for every $1 of surplus has a 2-to-1 premium to surplus ratio. The lower the ratio, the greater the company’s financial strength. State regulators have established as a guideline a premium to surplus ratio no higher than 3 to 1.
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This ratio is designed to measure the ability of the insurer to absorb above average losses and the insurer’s financial strength. The ratio is computed by dividing net premium written by surplus. An insurance company’s surplus is the amount by which assets exceed liabilities. The ratio is computed by dividing net premium written by surplus.
Premium Transfer
Method used at Lloyd’s where a risk is insured for more than twelve months. The premium for the period in excess of twelve months is paid over, as an internal transaction by the original syndicate to its successor syndicate as reconstituted for the ensuing year.
Premium Trust Fund
A fund into which all premiums for a Lloyd’s syndicate in a given underwriting year are paid. No moneys may be released from the fund other than any profit on closure and on-going claims and expenses.
Premium Trust Fund, Reinsurance, Lloyd’s
A fund into which all premiums for a Lloyd’s syndicate in a given underwriting year are paid. No moneys may be released from the fund other than any profit on closure and ongoing claims and expenses.
Premium value
Valuation of a long-term insurance policy for the pension scheme’s accounts. It is based on how much the scheme has to pay for each member. The actuary or accountant may opt for a modified premium value, i.e. one that excludes the company’s setting up charges.
Premium-delay arrangement
See: deferred premium arrangement.
Premium/expense ratio
A ratio that relates expenses to net premium earned.
Premiums earned
The portion of the written premium allocable (usually pro rata) to the time already elapsed under the policy period.