Earned Premium

The Earned Premium is the part of the premium that has already been earned by the insurer, and is based on how far the policy has proceeded. For example, a typical 12 month policy will have:

• 0% of the premium earned as of the start date
• 25% of the premium earned at the end of month 3
• 50% of the premium earned at the end of month 6
• 100% of the premium earned at the end of month 12

This is different to the Written Premium, where the whole premium is recognised upfront.