View source for Definition:Collected premium

💰 '''Collected premium''' is the portion of [[Definition:Written premium | written premium]] that an [[Definition:Insurance carrier | insurance carrier]] or [[Definition:Managing general agent (MGA) | MGA]] has actually received as cash or confirmed payment from [[Definition:Policyholder | policyholders]] or [[Definition:Insurance broker | brokers]], as opposed to the broader amount invoiced or booked. While [[Definition:Earned premium | earned premium]] reflects an accounting concept tied to the passage of time and exposure, collected premium is a cash-flow measure that tells an organization how much money has physically come in the door. The distinction matters most in lines or distribution channels where payment lags — installment billing, [[Definition:Premium finance | premium-financed]] accounts, or broker-intermediated placements where funds pass through multiple hands before reaching the carrier.

⚙️ Tracking collected premium requires coordination among [[Definition:Policy administration system | policy administration systems]], billing platforms, and bank reconciliation processes. When a policy is written, the full premium is recorded as written premium, but collected premium only increases as each installment, deposit, or lump-sum payment clears. In delegated-authority arrangements — where an MGA or [[Definition:Coverholder | coverholder]] collects premiums on behalf of the insurer — the carrier monitors a [[Definition:Bordereaux | bordereaux]] or periodic settlement statement to confirm that collected funds have been remitted. Delays or discrepancies between written and collected figures can signal [[Definition:Underwriting | underwriting]] quality issues, distribution-channel problems, or, in worst cases, [[Definition:Premium diversion | premium diversion]].

📊 From a financial management perspective, collected premium drives an insurer's [[Definition:Cash flow underwriting | cash flow]] position and its ability to pay [[Definition:Claim | claims]], fund [[Definition:Loss reserves | reserves]], and invest assets. Regulators and [[Definition:Rating agency | rating agencies]] scrutinize the gap between written and collected premium as an indicator of balance-sheet health; a persistently wide gap may suggest aggressive booking practices or weak controls over [[Definition:Premium receivable | premium receivables]]. For [[Definition:Insurtech | insurtech]] companies building modern billing and payment infrastructure, accelerating premium collection through digital wallets, automated recurring payments, and real-time reconciliation is a tangible way to improve carrier economics and reduce operational friction throughout the [[Definition:Insurance value chain | insurance value chain]].

'''Related concepts'''
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* [[Definition:Written premium]]
* [[Definition:Earned premium]]
* [[Definition:Premium receivable]]
* [[Definition:Premium finance]]
* [[Definition:Bordereaux]]
* [[Definition:Cash flow underwriting]]
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