https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3APremiums_receivable 2026-05-16T09:42:07Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Premiums_receivable&diff=22700&oldid=prev 2026-03-31T17:21:40Z

<p>Bot: Creating definition</p> <p><b>New page</b></p><div>🧾 &#039;&#039;&#039;Premiums receivable&#039;&#039;&#039; is the balance sheet asset representing [[Definition:Premium|premiums]] that an insurer has recognized as due from [[Definition:Policyholder|policyholders]], [[Definition:Insurance broker|brokers]], [[Definition:Managing general agent (MGA)|managing general agents]], or other intermediaries but has not yet collected in cash. In insurance accounting, policies are frequently bound and coverage begins before the full premium payment is received — particularly in commercial and [[Definition:Specialty insurance|specialty lines]], where complex payment schedules and broker credit terms are standard. The resulting receivable is a critical working capital item and, for large commercial insurers and [[Definition:Lloyd&#039;s of London|Lloyd&#039;s]] syndicates alike, can represent a substantial portion of total assets.<br /> <br /> 🔍 Managing premiums receivable requires attention to credit quality, aging, and collection practices. Insurers typically establish an allowance for doubtful accounts — analogous to a bad debt provision — based on historical collection experience, counterparty creditworthiness, and market conditions. In the [[Definition:London market|London market]], where premiums flow through intermediary chains involving multiple brokers and [[Definition:Coverholder|coverholders]], settlement can take months after inception, and the timing of cash flows is governed by market agreements such as the Lloyd&#039;s Central Accounting system. Regulatory frameworks in most jurisdictions require insurers to report premiums receivable net of provisions and to apply prudent assumptions when determining [[Definition:Admitted assets|admitted asset]] values for [[Definition:Solvency|solvency]] purposes. Under [[Definition:US statutory accounting|US statutory accounting principles (SAP)]], premiums that remain uncollected beyond 90 days are generally non-admitted, meaning they are excluded from the surplus calculation — a rule designed to prevent insurers from overstating their financial strength based on stale receivables.<br /> <br /> ⚙️ A well-controlled premiums receivable process has direct implications for an insurer&#039;s [[Definition:Cash flow|cash flow]], investment income, and regulatory capital position. Delays in premium collection reduce the funds available for investment, compress [[Definition:Investment income|investment returns]], and can signal distribution channel weaknesses or emerging credit problems within an intermediary network. Conversely, efficient premium collection — increasingly supported by digital billing platforms, automated reconciliation tools, and real-time payment integrations — strengthens liquidity and reduces the need for short-term borrowing. For [[Definition:Insurtech|insurtech]] companies offering pay-per-use or subscription-based products, the nature of premiums receivable may look different from traditional annual-premium models, but the fundamental challenge remains: ensuring that the cash backing recognized revenue arrives promptly and that the balance sheet accurately reflects collectible amounts.<br /> <br /> &#039;&#039;&#039;Related concepts:&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Premiums written]]<br /> * [[Definition:Premiums earned]]<br /> * [[Definition:Admitted assets]]<br /> * [[Definition:Statutory accounting]]<br /> * [[Definition:Broker]]<br /> * [[Definition:Cash flow underwriting]]<br /> {{Div col end}}</div>

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