How insurers measure growth, profit and capital: premium measures, ratios, reserves, solvency and accounting. This topic has 15 entries.
Insurance finance and actuarialGross written premium (GWP)Gross written premium (GWP) is the total premium an insurer writes in a period before deducting reinsurance, covering new and renewal business and, for general insurers, reinsurance accepted.Insurance finance and actuarialNew business premium (NBP)New business premium (NBP) is the premium a life insurer collects from policies sold in a period: the first year premium on regular premium policies plus all single premiums.Insurance finance and actuarialAnnualised premium equivalent (APE)Annualised premium equivalent (APE) is a life insurance sales measure equal to the annualised first year premium on regular premium policies plus 10% of single premiums written in a period.Insurance finance and actuarialValue of new business (VNB) and VNB marginValue of new business (VNB) is the present value of future profits expected from life policies sold in a period, after the cost of capital. VNB margin is VNB divided by APE.Insurance finance and actuarialEmbedded valueEmbedded value is an actuarial measure of a life insurer's worth to shareholders: its adjusted net worth plus the present value of future profits from policies already in force.Insurance finance and actuarialCombined ratioCombined ratio is a general insurer's claims ratio plus its expense ratio. Below 100% means an underwriting profit; above 100% means claims and costs exceed the premium earned.Insurance finance and actuarialLoss ratio and incurred claims ratioLoss ratio, called the incurred claims ratio (ICR) in IRDAI data, is a general or health insurer's net incurred claims divided by its net earned premium for a period.Insurance finance and actuarialExpense ratioExpense ratio is an insurer's commission and operating expenses as a share of premium. In India it is tested against the IRDAI Expenses of Management limits for each insurer.Insurance finance and actuarialSolvency ratio and solvency marginSolvency ratio is an insurer's available solvency margin divided by its required solvency margin. IRDAI requires every insurer to stay above a control level of 150% at all times.Insurance finance and actuarialRisk based capital (RBC)Risk based capital (RBC) is a solvency regime in which an insurer's required capital is set by the risks it actually carries. IRDAI is preparing an Indian RBC framework to replace the 150% rule.Insurance finance and actuarialInd AS 117 and IFRS 17Ind AS 117 is India's accounting standard for insurance contracts, converged with IFRS 17. IRDAI made Ind AS applicable to insurers from 1 April 2026, with deferral for some to 2027-28.Insurance finance and actuarialIBNR (incurred but not reported) reservesIBNR (incurred but not reported) reserves are amounts an insurer sets aside for claims from events that have already happened but have not yet been reported to it at the valuation date.Insurance finance and actuarialInsurance floatInsurance float is the money an insurer holds and invests between collecting premiums and paying claims, made up mainly of unearned premium and claims reserves.Insurance finance and actuarialActuary and appointed actuaryAn actuary is a professional who measures financial risk using probability and statistics. Every Indian insurer must have an appointed actuary, approved by IRDAI, who signs off reserves and solvency.Insurance finance and actuarialInsurance penetration and densityInsurance penetration is total insurance premium as a percentage of GDP; insurance density is premium per person. India's penetration was 3.7% and density USD 97 in 2024-25.