|
💰 '''Gross written premium (GWP)''' is the total amount of [[Definition:Premium | premium]] an [[Definition:Insurance carrier | insurer]]insurance or [[Definition:Reinsurance | reinsurercarrier]] records on all [[Definition:Insurance policyPolicy | policies]] issuedit issues or renews during a givenspecific period, before any deductions for [[Definition:Reinsurance | reinsurance]] ceded,cessions or adjustments for the portion of premium not yet [[Definition:CommissionEarned premium | commissionsearned]], or other adjustments. It isserves as the top-line revenue measurefigure of an insurance businessoperation, analogous to gross sales in other industries, and is the singlestarting most-citedpoint from which virtually every other financial metric for— gauging[[Definition:Net anwritten insurer'spremium market(NWP) size,| growthnet trajectorywritten premium]], and[[Definition:Gross competitiveearned position.premium When| angross industryearned reportpremium]], states[[Definition:Loss thatratio a| carrierloss "writesratios]], $5and billionthe in[[Definition:Combined premium,"ratio it| iscombined almostratio]] always— referencingis GWPderived.
📐 Each time a carrier [[Definition:Binding authority agreement | binds]] coverage, the full [[Definition:Policy premium | policy premium]] is added to GWP regardless of whether the insurer will later cede a portion to a [[Definition:Reinsurer | reinsurer]] under a [[Definition:Treaty reinsurance | treaty]] or [[Definition:Facultative reinsurance | facultative]] arrangement. A mid-size commercial insurer that writes 10,000 policies averaging $50,000 each in a quarter reports $500 million in GWP for that period. Importantly, GWP is a written-basis measure — it reflects when coverage incepts, not when the premium is collected or when it becomes earned over the policy term. This distinction means GWP can surge at renewal dates or during rapid growth phases even if [[Definition:Cash flow | cash flow]] from premium collections lags. Carriers also track GWP by [[Definition:Line of business | line of business]], distribution channel, and geography to assess where growth originates and whether it aligns with strategic targets.
⚙️ GWP captures every dollar of premium that appears on bound policies, whether the coverage period has begun or not and regardless of whether the premium has actually been collected. It includes new business, renewals, and [[Definition:Endorsement | mid-term endorsements]]. From GWP, the insurer subtracts premiums ceded to reinsurers to arrive at [[Definition:Net written premium (NWP) | net written premium]], which represents the premium the carrier retains and must support with its own [[Definition:Capital | capital]] and [[Definition:Loss reserves | reserves]]. Further down the income statement, [[Definition:Earned premium | earned premium]] is recognized ratably as coverage is provided over time. A fast-growing carrier can show impressive GWP figures while its [[Definition:Earned premium | earned premium]] lags behind, which is why analysts scrutinize the relationship between written and earned numbers alongside the [[Definition:Loss ratio (L/R) | loss ratio]] and [[Definition:Combined ratio | combined ratio]].
📈 Beyond itsinternal role on financial statementsmanagement, GWP drivesfigures criticalcommand operationalclose andattention strategic decisions.from [[Definition:Rating agency | Ratingrating agencies]], like[[Definition:Insurance AMregulator Best| evaluateregulators]], premiuminvestors, volume relative toand [[Definition:Policyholder surplusReinsurer | policyholder surplusreinsurance]] topartners. assessRapid leverageGWP riskgrowth —may rapidsignal GWPmarket growthopportunity, withoutbut correspondingit capitalalso supportraises isquestions aabout red flag.whether [[Definition:Managing general agent (MGA)Underwriting | MGAsunderwriting]] discipline and [[Definition:Program administratorReserves | program administratorsreserve]] reportadequacy GWPare tokeeping theirpace. capacity[[Definition:Rating providersagency as| aRating keyagencies]] performanceoften indicatorcompare underGWP growth to [[Definition:BindingSurplus authority| agreementsurplus]] |levels bindingto authorityevaluate agreements]]leverage, and fallingregulators shortmonitor ofthe orratio exceeding projectedof GWP canto triggersurplus contractas renegotiationsa solvency indicator. For [[Definition:Managing general agent (MGA) | MGAs]] and [[Definition:Insurtech | insurtechs]] seeking funding[[Definition:Capacity | capacity]], demonstrating consistent, profitable GWP growth rate is oftenone of the headlinemost metricpersuasive investorsarguments evaluatewhen first,negotiating thoughwith savvycarrier backerspartners quicklyfor look beneath it atexpanded [[Definition:LossDelegated ratiounderwriting authority (L/RDUA) | lossdelegated ratiosauthority]] and unit economics to determine whether growth is profitable or simply buying market share at unsustainable cost.
'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Net written premium (NWP)]]
* [[Definition: LossGross ratioearned (L/R)premium]] ▼* [[Definition:Earned premium]]
* [[Definition:Combined ratio]]
▲* [[Definition:Loss ratio (L/R)]]
* [[Definition:Policyholder surplus]] ▼* [[Definition:Ceded premium]]
▲* [[Definition: PolicyholderPremium surplusvolume]]
{{Div col end}}
|