Gross written premiums are:

Question

Options

• Awritten premiums plus net written premiums
• Bindirect written premiums plus direct written premiums
• Cdirect written premiums plus assumed reinsurance premiums
• Ddirect written premiums plus ceded reinsurance premiums

• A
  4% (2)
• B
  11% (5)
• C
  80% (37)
• D
  4% (2)

Explanation

Gross written premiums (GWP) represent the total premiums an insurer writes before any reinsurance adjustments, which is exactly what Option C captures: premiums collected directly from policyholders (direct written premiums) plus premiums received from other insurers whose risk you've agreed to take on (assumed reinsurance). Together, these reflect all premium inflows before anything is transferred away.

Option A is nonsensical because it conflates different metrics - net written premiums are derived from gross written premiums (by subtracting ceded reinsurance), so you can't add them together meaningfully.

Option B fails because "indirect written premiums" is not a standard industry term; assumed reinsurance is sometimes informally called indirect, but the proper terminology matters on exams - and even then, the framing here is incorrect.

Option D reverses the reinsurance direction: ceded premiums are what you pay out to transfer risk to reinsurers, which is subtracted to arrive at net written premiums, not added to arrive at gross.

Memory tip: Think of the formula as a flow - Gross = Direct + Assumed (all money coming IN); Net = Gross − Ceded (after money going OUT). "Gross" means before giving anything away, so only incoming reinsurance (assumed) belongs in the calculation.

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