What does written premium refer to in insurance terms?

Written premium refers to the total premium on all insurance policies that have been written during a specified time frame, typically within a year. It represents the initial amount of money the insurer expects to collect from policyholders for the coverage provided. This figure provides an important indicator of an insurance company's business volume and potential revenue.

When examining the nature of written premium, it is crucial to differentiate it from other types of premium metrics. For instance, earned premium is the portion of premium that has been recognized as income for the insurer because the coverage period has elapsed. In contrast, unearned premium refers to the portion of premium that has not yet been earned since it covers future periods of insurance.

Understanding written premium helps in evaluating an insurance company's growth and market presence, allowing stakeholders to gauge how well the company is performing in terms of policy sales and potential cash flow. This clarity in terminology is vital for accurate financial reporting and analysis in the insurance landscape.