Gross Written Premium
Financials
Industry:
Fintech
Short Definition
Gross Written Premium (GWP) is the total amount of direct and assumed premiums written by an insurance company during a specific period before deductions for reinsurance and commissions. It represents the gross revenue volume from all insurance policies issued and assumed in that timeframe.
Short Definition
Gross Written Premium (GWP) is the total amount of direct and assumed premiums written by an insurance company during a specific period before deductions for reinsurance and commissions. It represents the gross revenue volume from all insurance policies issued and assumed in that timeframe.
Short Definition
Gross Written Premium (GWP) is the total amount of direct and assumed premiums written by an insurance company during a specific period before deductions for reinsurance and commissions. It represents the gross revenue volume from all insurance policies issued and assumed in that timeframe.
Why it matters for Investors
Measure of scale: GWP shows the total volume of business an insurer has written, indicating market share and growth.
Revenue indicator: It provides insight into premium income before expenses and claims.
Risk exposure indicator: GWP includes both direct business and premiums assumed from reinsurers, showing full risk underwriting activity.
Why it matters for Investors
Measure of scale: GWP shows the total volume of business an insurer has written, indicating market share and growth.
Revenue indicator: It provides insight into premium income before expenses and claims.
Risk exposure indicator: GWP includes both direct business and premiums assumed from reinsurers, showing full risk underwriting activity.
Why it matters for Investors
Measure of scale: GWP shows the total volume of business an insurer has written, indicating market share and growth.
Revenue indicator: It provides insight into premium income before expenses and claims.
Risk exposure indicator: GWP includes both direct business and premiums assumed from reinsurers, showing full risk underwriting activity.
Formula
Practical considerations:
Includes both premiums collected on policies issued directly to customers and premiums from reinsurance accepted from other insurers.
Calculated before deducting premiums ceded to reinsurers.
Different from Net Written Premium, which subtracts ceded premiums, and Earned Premium, which reflects coverage provided during the period.
Best analyzed alongside loss ratios, expense ratios, and solvency data to assess financial health.
Formula
Practical considerations:
Includes both premiums collected on policies issued directly to customers and premiums from reinsurance accepted from other insurers.
Calculated before deducting premiums ceded to reinsurers.
Different from Net Written Premium, which subtracts ceded premiums, and Earned Premium, which reflects coverage provided during the period.
Best analyzed alongside loss ratios, expense ratios, and solvency data to assess financial health.
Formula
Practical considerations:
Includes both premiums collected on policies issued directly to customers and premiums from reinsurance accepted from other insurers.
Calculated before deducting premiums ceded to reinsurers.
Different from Net Written Premium, which subtracts ceded premiums, and Earned Premium, which reflects coverage provided during the period.
Best analyzed alongside loss ratios, expense ratios, and solvency data to assess financial health.
Worked Example
Line Item | Amount ($) | Notes |
|---|---|---|
Direct Written Premium (DWP) | $50,000,000 | Premiums on policies directly written by insurer |
Assumed Premium from Reinsurance | $10,000,000 | Premiums assumed via reinsurance treaties |
Gross Written Premium (GWP) | $60,000,000 | Sum of direct and assumed premiums before deductions |
Notes:
The total gross written premium for the year is $60 million, showing the insurer’s combined direct and assumed business volume.
This represents the top-line premium revenue potentially collectible before expenses, claims, or reinsurance adjustments.
GWP is a critical growth and scale metric for insurers, useful for comparisons within the industry.
Worked Example
Line Item | Amount ($) | Notes |
|---|---|---|
Direct Written Premium (DWP) | $50,000,000 | Premiums on policies directly written by insurer |
Assumed Premium from Reinsurance | $10,000,000 | Premiums assumed via reinsurance treaties |
Gross Written Premium (GWP) | $60,000,000 | Sum of direct and assumed premiums before deductions |
Notes:
The total gross written premium for the year is $60 million, showing the insurer’s combined direct and assumed business volume.
This represents the top-line premium revenue potentially collectible before expenses, claims, or reinsurance adjustments.
GWP is a critical growth and scale metric for insurers, useful for comparisons within the industry.
Worked Example
Line Item | Amount ($) | Notes |
|---|---|---|
Direct Written Premium (DWP) | $50,000,000 | Premiums on policies directly written by insurer |
Assumed Premium from Reinsurance | $10,000,000 | Premiums assumed via reinsurance treaties |
Gross Written Premium (GWP) | $60,000,000 | Sum of direct and assumed premiums before deductions |
Notes:
The total gross written premium for the year is $60 million, showing the insurer’s combined direct and assumed business volume.
This represents the top-line premium revenue potentially collectible before expenses, claims, or reinsurance adjustments.
GWP is a critical growth and scale metric for insurers, useful for comparisons within the industry.
Best Practices
Segment GWP reporting by product line and geography for detailed business insights.
Distinguish clearly between direct and assumed premiums for transparency.
Use with Net Written Premium and Earned Premium to get a complete revenue and risk profile.
Verify internal consistency with financial statements and regulatory filings.
Best Practices
Segment GWP reporting by product line and geography for detailed business insights.
Distinguish clearly between direct and assumed premiums for transparency.
Use with Net Written Premium and Earned Premium to get a complete revenue and risk profile.
Verify internal consistency with financial statements and regulatory filings.
Best Practices
Segment GWP reporting by product line and geography for detailed business insights.
Distinguish clearly between direct and assumed premiums for transparency.
Use with Net Written Premium and Earned Premium to get a complete revenue and risk profile.
Verify internal consistency with financial statements and regulatory filings.
FAQs
Is GWP the same as revenue?
No, it’s gross premiums written before any deductions and before recognizing earned revenue.How is GWP different from Net Written Premium?
Net Written Premium subtracts premiums ceded to reinsurers, representing retained risk.Why include assumed premiums?
Assumed premiums reflect additional risk taken from other insurers and increase the total underwriting volume.Why is GWP important?
It shows the full volume of business underwritten by the insurer, critical for growth and solvency assessment.
FAQs
Is GWP the same as revenue?
No, it’s gross premiums written before any deductions and before recognizing earned revenue.How is GWP different from Net Written Premium?
Net Written Premium subtracts premiums ceded to reinsurers, representing retained risk.Why include assumed premiums?
Assumed premiums reflect additional risk taken from other insurers and increase the total underwriting volume.Why is GWP important?
It shows the full volume of business underwritten by the insurer, critical for growth and solvency assessment.
FAQs
Is GWP the same as revenue?
No, it’s gross premiums written before any deductions and before recognizing earned revenue.How is GWP different from Net Written Premium?
Net Written Premium subtracts premiums ceded to reinsurers, representing retained risk.Why include assumed premiums?
Assumed premiums reflect additional risk taken from other insurers and increase the total underwriting volume.Why is GWP important?
It shows the full volume of business underwritten by the insurer, critical for growth and solvency assessment.
Related Metrics
Commonly mistaken for:
Direct Written Premium (DWP) (It is premiums written directly on policies sold by the insurer)
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:
Direct Written Premium (DWP) (It is premiums written directly on policies sold by the insurer)
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:
Direct Written Premium (DWP) (It is premiums written directly on policies sold by the insurer)
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:
Components:
Index