https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AAdditional_premium 2026-04-30T11:41:50Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Additional_premium&diff=12523&oldid=prev 2026-03-13T11:50:11Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>📋 &#039;&#039;&#039;Additional premium&#039;&#039;&#039; is a supplementary amount charged to a [[Definition:Policyholder | policyholder]] after the inception of an [[Definition:Insurance policy | insurance policy]], reflecting changes in the risk profile, exposure base, or coverage scope that were not fully captured by the original [[Definition:Premium | premium]]. In both [[Definition:Personal lines | personal]] and [[Definition:Commercial lines | commercial lines]] of business, premiums are frequently set at inception based on estimates — projected payroll for [[Definition:Workers&#039; compensation insurance | workers&#039; compensation]], anticipated revenue for [[Definition:General liability insurance | general liability]], or provisional sums insured for [[Definition:Property insurance | property]] covers — and the additional premium reconciles those estimates against actual figures once they are known.<br /> <br /> ⚙️ The mechanics depend on the policy structure and the market conventions in play. Under an [[Definition:Adjustable premium | adjustable]] or [[Definition:Audit premium | auditable]] policy, the insurer conducts a [[Definition:Premium audit | premium audit]] at or after the policy&#039;s expiration, comparing estimated exposures (such as payroll, sales, or unit counts) to the actual figures reported by the insured. If the actual exposure exceeds the estimate, an additional premium is invoiced; if it falls short, a [[Definition:Return premium | return premium]] is issued. In [[Definition:Reinsurance | reinsurance]], additional premiums commonly arise under [[Definition:Treaty reinsurance | treaty]] arrangements with [[Definition:Sliding scale commission | sliding scale commissions]] or [[Definition:Experience-rated | experience-rated]] terms, where the final premium adjusts based on [[Definition:Loss ratio | loss ratio]] experience over the treaty period. [[Definition:Lloyd&#039;s of London | Lloyd&#039;s]] and London market policies may incorporate additional premium mechanisms tied to declarations of value or reinstatement provisions following a [[Definition:Catastrophe loss | catastrophe loss]], while in Asian markets such as Japan and Singapore, similar adjustment clauses appear in marine and engineering lines where provisional sums insured are standard practice.<br /> <br /> 💡 Getting additional premium calculations right has tangible financial consequences for both sides of the transaction. An insurer that fails to collect warranted additional premiums effectively underprices the risk, eroding its [[Definition:Combined ratio | combined ratio]] and distorting its [[Definition:Reserving | reserve]] adequacy. Conversely, a policyholder that does not understand adjustment clauses may face an unexpected invoice months after the policy has expired, straining cash flow and damaging the broker-client relationship. Skilled [[Definition:Insurance broker | brokers]] mitigate this by setting realistic provisional premiums at inception, educating clients about the audit or adjustment process, and negotiating caps or minimum-and-deposit structures that limit the magnitude of post-inception swings.<br /> <br /> &#039;&#039;&#039;Related concepts:&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Premium audit]]<br /> * [[Definition:Return premium]]<br /> * [[Definition:Deposit premium]]<br /> * [[Definition:Minimum and deposit premium]]<br /> * [[Definition:Adjustable premium]]<br /> * [[Definition:Earned premium]]<br /> {{Div col end}}</div>

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