https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AReturn_premium 2026-04-29T15:09:07Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Return_premium&diff=8188&oldid=prev 2026-03-10T13:48:57Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>💰 &#039;&#039;&#039;Return premium&#039;&#039;&#039; is a refund of a portion of [[Definition:Premium | premium]] from an [[Definition:Insurance carrier | insurance carrier]] or [[Definition:Reinsurer | reinsurer]] back to the [[Definition:Policyholder | policyholder]] or [[Definition:Cedent | cedent]], issued when certain conditions reduce the amount of premium originally owed. Common triggers include mid-term [[Definition:Policy cancellation | policy cancellation]], a reduction in [[Definition:Exposure | covered exposures]], favorable results under [[Definition:Loss-sensitive program | loss-sensitive]] arrangements, or corrections following a [[Definition:Premium audit | premium audit]] that reveals lower-than-estimated payrolls, sales, or unit counts.<br /> <br /> 🔄 The mechanics depend on the reason for the refund. In a standard mid-term cancellation, the return premium equals the unearned portion of the [[Definition:Written premium | written premium]] — calculated either on a pro-rata basis or, if the insured initiates the cancellation, sometimes on a [[Definition:Short-rate cancellation | short-rate]] basis that imposes a penalty. In [[Definition:Reinsurance | reinsurance]], return premiums arise when a [[Definition:Treaty reinsurance | treaty]] includes [[Definition:Sliding-scale commission | sliding-scale commissions]] or [[Definition:Profit commission | profit commissions]] tied to [[Definition:Loss ratio | loss ratios]], or when a [[Definition:Provisional premium | provisional premium]] is adjusted downward after final figures are reported. Operationally, the carrier issues either a direct payment or a credit applied against future [[Definition:Premium | premium]] installments, with corresponding adjustments flowing through the [[Definition:Bordereaux | bordereaux]] and [[Definition:Accounting | accounting]] systems of any intermediaries involved.<br /> <br /> 📌 Handling return premiums accurately is more than a bookkeeping exercise — it has direct implications for [[Definition:Revenue recognition | revenue recognition]], [[Definition:Unearned premium reserve | unearned premium reserves]], and regulatory financial reporting. Under accounting standards like [[Definition:IFRS 17 | IFRS 17]] and [[Definition:Statutory accounting principles (SAP) | SAP]], the timing and classification of a return premium affect an insurer&#039;s income statement and balance sheet in ways that auditors and regulators scrutinize closely. For policyholders, prompt and transparent return-premium processing signals good faith and strengthens the relationship with the carrier or [[Definition:Insurance broker | broker]]. In [[Definition:Delegated underwriting authority (DUA) | delegated authority]] arrangements, [[Definition:Managing general agent (MGA) | MGAs]] and [[Definition:Coverholder | coverholders]] must reconcile return premiums carefully to ensure the correct net amount is remitted to the capacity provider.<br /> <br /> &#039;&#039;&#039;Related concepts&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Earned premium]]<br /> * [[Definition:Unearned premium reserve]]<br /> * [[Definition:Premium audit]]<br /> * [[Definition:Short-rate cancellation]]<br /> * [[Definition:Policy cancellation]]<br /> * [[Definition:Provisional premium]]<br /> {{Div col end}}</div>

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