Glossary
Earned Premium
The portion of a policy's premium that corresponds to coverage already provided, recognised proportionally as the policy term elapses.
Premium is earned as the insurer takes on risk over time. Halfway through a twelve-month policy, half the premium has been earned; the rest is still unearned and would be refundable if the policy cancelled. Earned premium is the revenue-recognition view of a book of business.
Agencies mostly care about earned premium because commission on a cancelled policy is clawed back in proportion to the unearned portion. That clawback appears on a later carrier statement as a negative line, and reconciling it requires knowing when the policy cancelled and how much premium had been earned by then.
See also
- Unearned Premium — The portion of a policy's premium covering the remainder of the term — not yet earned by the insurer and refundable if t…
- Written Premium — The total premium on policies an agency has bound during a period, regardless of whether it has been collected or earned…
- Chargeback — A reversal of a previously paid commission, typically because a policy was canceled, downgraded, or the premium was retu…