The insurance premium (insurance premium) is the cost of the insurance service that the policyholder pays to the insurer. In other words, this is the price for the services of the insurer from the client in case an insured event occurs.
Instructions
Step 1
When calculating the insurance premium, proceed from the fact that it must cover the expected claims of the insurance period, create insurance reserves, cover the company's costs of doing business, and also ensure that a certain amount of profit is obtained. In addition, keep in mind that the size and structure of the insurance portfolio and the management costs of the insurance company affect the amount of the premium.
Step 2
Calculate the insurance premium based on the insurance rate, which is the rate of insurance premium for one insurance object. The tariff for compulsory types of insurance is regulated by law and is set centrally. The company has the right to set the tariff for voluntary insurance independently. It is insurance premiums from voluntary insurance that have a significant impact on the financial stability of the insurer.
Step 3
Remember that the amount of the insurance premium is always determined on the basis of the insurance rate, the sum insured and other factors and is reflected in the insurance policy. Calculate the insurance premium by multiplying the base tariff rates by various coefficients. For example, in auto insurance, the base rates depend on the technical characteristics and purpose of the car, the territory of its use, the number of drivers, the period of operation, the availability of anti-theft devices, the insurance history of drivers, etc.
Step 4
When calculating the size of the insurance premium (gross premium), keep in mind that it is divided into two parts: the net premium and the load. The first is used to form the organization's insurance reserves and insurance payments. The second part, usually a smaller one, is used to support the insurer's activities and generate profits.
Step 5
When including a deductible in the insurance contract, be sure to keep in mind that the insurance premium is reduced by the amount of the insurance rate multiplied by the deductible. In this case, it is calculated by the formula:
P = TB (S-F), where: TB - gross tariff rate; С - sum insured; F - the size of the franchise.
