What does Developed to Net Premiums Earned mean? Read on to discover the definition & meaning of the term Developed to Net Premiums Earned - to help you better understand the language used in insurance policies.
Developed to Net Premiums Earned
Developed to net premiums earned refers to the ratio of developed premiums to the net premiums earned. The gross premiums written by an insurance company comprise the premium to cover projected losses (i.e., net premium), plus some funds for administrative and other expenses (i.e., loading). The ratio of the premiums that have developed over a given period of time to the net premiums serves as an indicator of whether an insurance company has enough reserves to cover its actual losses. Reserves are set up from the net premium.
We hope the you have a better understanding of the meaning of Developed to Net Premiums Earned.