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Earned Premium |
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Earned Premium In insurance accounting, the prepaid premium that an insurance company may count as profit because of the length of its exposure to risk. For example, suppose a policyholder pays three years' worth of premiums up front. After a year has gone by, the insurer may count one third of that premium as earned premium and therefore profit. Earning the premium only works if no claims exceeding the amount of the premium are filed; it there are claims, the insurer may take a loss. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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