What is not related to premiums paid to or received from another insurance company, either a company to whom reinsurance is ceded or a company from whom reinsurance is assumed?

Question

Options

• Awritten premium
• Bdirect written premium
• Ctotal premium
• Dnet written premium

• A
  16% (7)
• B
  74% (32)
• C
  7% (3)
• D
  2% (1)

Explanation

Direct written premium (B) refers exclusively to premiums written directly with policyholders - it intentionally excludes any reinsurance transactions, whether ceded or assumed, making it the only term with no connection to inter-company premium flows.

The distractors are wrong because they all involve reinsurance in some way: written premium (A) includes premiums received from assuming reinsurance from another insurer; net written premium (D) is written premium minus ceded reinsurance premiums, so it directly reflects payments made to reinsurers; and total premium (C) is a broad figure that aggregates all premium sources, including both assumed and direct business.

Memory tip: Think "direct" = direct to the policyholder, no middleman insurer involved. If a term involves "net" (something was subtracted) or lacks the word "direct," reinsurance is almost certainly in the picture.

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