Direct Written Premium
Financials
Industry:
Fintech
Short Definition
Direct Written Premium (DWP) refers to the total premiums an insurance company collects on policies it issues during a specific period, before any deductions such as reinsurance. It reflects the gross amount of new insurance business written and is a key measure of sales volume.
Short Definition
Direct Written Premium (DWP) refers to the total premiums an insurance company collects on policies it issues during a specific period, before any deductions such as reinsurance. It reflects the gross amount of new insurance business written and is a key measure of sales volume.
Short Definition
Direct Written Premium (DWP) refers to the total premiums an insurance company collects on policies it issues during a specific period, before any deductions such as reinsurance. It reflects the gross amount of new insurance business written and is a key measure of sales volume.
Why it matters for Investors
Business growth indicator: DWP measures how much new business the insurer is generating in the period. Growing DWP suggests expanding market share or increased policy sales.
Revenue driver: It represents the total premiums written before expenses or claims, providing a top-line revenue snapshot.
Risk visibility: Shows underwriting activity and exposure before considering reinsurance adjustments.
Why it matters for Investors
Business growth indicator: DWP measures how much new business the insurer is generating in the period. Growing DWP suggests expanding market share or increased policy sales.
Revenue driver: It represents the total premiums written before expenses or claims, providing a top-line revenue snapshot.
Risk visibility: Shows underwriting activity and exposure before considering reinsurance adjustments.
Why it matters for Investors
Business growth indicator: DWP measures how much new business the insurer is generating in the period. Growing DWP suggests expanding market share or increased policy sales.
Revenue driver: It represents the total premiums written before expenses or claims, providing a top-line revenue snapshot.
Risk visibility: Shows underwriting activity and exposure before considering reinsurance adjustments.
Formula
Practical considerations:
Includes premiums on all new and renewed policies written in the period regardless of coverage tenure.
Before deducting premiums ceded to reinsurers, which are accounted separately.
Different from earned premiums, which recognize revenue for coverage provided during the period.
Represents gross insurance sales activity but not profitability or net retained premiums.
Should be tracked by product line and geography for detailed analysis.
Formula
Practical considerations:
Includes premiums on all new and renewed policies written in the period regardless of coverage tenure.
Before deducting premiums ceded to reinsurers, which are accounted separately.
Different from earned premiums, which recognize revenue for coverage provided during the period.
Represents gross insurance sales activity but not profitability or net retained premiums.
Should be tracked by product line and geography for detailed analysis.
Formula
Practical considerations:
Includes premiums on all new and renewed policies written in the period regardless of coverage tenure.
Before deducting premiums ceded to reinsurers, which are accounted separately.
Different from earned premiums, which recognize revenue for coverage provided during the period.
Represents gross insurance sales activity but not profitability or net retained premiums.
Should be tracked by product line and geography for detailed analysis.
Worked Example
Line Item | Amount ($) | Notes |
|---|---|---|
Auto Insurance Premiums | $30,000,000 | Policies written between Jan 1 and Dec 31, 2024 |
Health Insurance Premiums | $20,000,000 | Policies written between Jan 1 and Dec 31, 2024 |
Total DWP | $50,000,000 | Total direct premiums written in 2024 |
Notes
The insurer wrote $50 million in new policies during the year ended December 31, 2024.
This total reflects sales volume before considering reinsurance or claims.
DWP shows gross premium volume and is useful for monitoring underwriting growth.
Worked Example
Line Item | Amount ($) | Notes |
|---|---|---|
Auto Insurance Premiums | $30,000,000 | Policies written between Jan 1 and Dec 31, 2024 |
Health Insurance Premiums | $20,000,000 | Policies written between Jan 1 and Dec 31, 2024 |
Total DWP | $50,000,000 | Total direct premiums written in 2024 |
Notes
The insurer wrote $50 million in new policies during the year ended December 31, 2024.
This total reflects sales volume before considering reinsurance or claims.
DWP shows gross premium volume and is useful for monitoring underwriting growth.
Worked Example
Line Item | Amount ($) | Notes |
|---|---|---|
Auto Insurance Premiums | $30,000,000 | Policies written between Jan 1 and Dec 31, 2024 |
Health Insurance Premiums | $20,000,000 | Policies written between Jan 1 and Dec 31, 2024 |
Total DWP | $50,000,000 | Total direct premiums written in 2024 |
Notes
The insurer wrote $50 million in new policies during the year ended December 31, 2024.
This total reflects sales volume before considering reinsurance or claims.
DWP shows gross premium volume and is useful for monitoring underwriting growth.
Best Practices
Track DWP regularly and segment by product, region, and channel to identify growth drivers.
Clearly distinguish gross (DWP) from net premiums after reinsurance to assess retained business.
Combine DWP with earned premiums and loss ratios to evaluate profitability.
Establish clear policies on what premiums qualify as written, especially for affiliates or subsidiaries.
Best Practices
Track DWP regularly and segment by product, region, and channel to identify growth drivers.
Clearly distinguish gross (DWP) from net premiums after reinsurance to assess retained business.
Combine DWP with earned premiums and loss ratios to evaluate profitability.
Establish clear policies on what premiums qualify as written, especially for affiliates or subsidiaries.
Best Practices
Track DWP regularly and segment by product, region, and channel to identify growth drivers.
Clearly distinguish gross (DWP) from net premiums after reinsurance to assess retained business.
Combine DWP with earned premiums and loss ratios to evaluate profitability.
Establish clear policies on what premiums qualify as written, especially for affiliates or subsidiaries.
FAQs
Is DWP the same as revenue? No, DWP is gross premiums written before reinsurance and revenue recognition adjustments.
How is DWP different from earned premium? Earned premium accounts for coverage provided during the period; DWP counts all premiums written regardless of coverage timing.
Does DWP consider reinsurance? No, premiums ceded to reinsurers are excluded and tracked separately.
Why is DWP important? It indicates sales growth and new policy volumes, essential for underwriting and business planning.
FAQs
Is DWP the same as revenue? No, DWP is gross premiums written before reinsurance and revenue recognition adjustments.
How is DWP different from earned premium? Earned premium accounts for coverage provided during the period; DWP counts all premiums written regardless of coverage timing.
Does DWP consider reinsurance? No, premiums ceded to reinsurers are excluded and tracked separately.
Why is DWP important? It indicates sales growth and new policy volumes, essential for underwriting and business planning.
FAQs
Is DWP the same as revenue? No, DWP is gross premiums written before reinsurance and revenue recognition adjustments.
How is DWP different from earned premium? Earned premium accounts for coverage provided during the period; DWP counts all premiums written regardless of coverage timing.
Does DWP consider reinsurance? No, premiums ceded to reinsurers are excluded and tracked separately.
Why is DWP important? It indicates sales growth and new policy volumes, essential for underwriting and business planning.
Related Metrics
Commonly mistaken for:
Gross Written Premium (GWP) (It is DWP plus premiums assumed via reinsurance)
Net Written Premium (It is GWP minus premiums ceded to reinsurers)
Earned Premium (It is portion of premiums recognized as revenue over time)
Related Metrics
Commonly mistaken for:
Gross Written Premium (GWP) (It is DWP plus premiums assumed via reinsurance)
Net Written Premium (It is GWP minus premiums ceded to reinsurers)
Earned Premium (It is portion of premiums recognized as revenue over time)
Related Metrics
Commonly mistaken for:
Gross Written Premium (GWP) (It is DWP plus premiums assumed via reinsurance)
Net Written Premium (It is GWP minus premiums ceded to reinsurers)
Earned Premium (It is portion of premiums recognized as revenue over time)
Source of:
Index