Gross Net Written Premium Income

Gross Net Written Premium Income (GNWPI)

Gross net written premium income (GNWPI) is the dollar amount of an insurer’s written premiums that serves as the base for calculating how much is owed to a reinsurer. It reflects the premiums the ceding insurer reports (not receipts) after certain deductions, and it is the figure to which a reinsurance premium rate is applied when a reinsurance agreement uses written premiums as its rating base.

Key takeaways

• GNWPI is the written-premium base used to determine amounts payable to a reinsurer under contracts that rate on written premiums.
• “Net” means deducting cancellations, refunds, and premiums paid for reinsurance; “gross” means expenses are not deducted.
• Reinsurance contracts specify whether the base will be written premiums (GNWPI) or earned premiums (GNEPI).
• If the reinsurer’s exposure increases over time, written premium income can exceed earned premium income.
• GNWPI is useful for measuring underwriting activity but does not reflect investment income or total assets.

How GNWPI is used in reinsurance

When an insurer cedes risk to a reinsurer, the reinsurer is typically entitled to a portion of premiums in exchange for assuming that risk. The reinsurance contract defines:
* the premium rate (percentage) payable to the reinsurer, and
* the base (subject or underlying premium) to which that rate is applied—either written premiums (GNWPI) or earned premiums (GNEPI).

If the contract uses written premiums, the reinsurance premium due = reinsurance rate × GNWPI.

Calculation and meaning

GNWPI is derived from the ceding insurer’s premium income, adjusted as follows:
* Subtract cancellations and refunds.
Subtract premiums paid for reinsurance.
Do not deduct operating expenses—hence “gross.”

By contrast, gross net earned premium income (GNEPI) uses earned premiums (amounts allocated to the coverage period) as the base. Excess-of-loss reinsurance and other agreements sometimes use earned premiums; contracts specify the chosen basis.

When risk assumed by the reinsurer ramps up over time, written premiums can be higher than earned premiums because written amounts reflect policy issuances regardless of the portion earned in a specific accounting period.

Limitations and comparison with other measures

GNWPI is a useful indicator of an insurer’s underwriting volume and the contractual basis for reinsurance charges, but it does not capture:
* investment income (from equities, bonds, etc.), or
* the insurer’s asset base and other financial returns.

Because of these omissions, analysts often consider other metrics—such as broking gross income or full financial statements—alongside GNWPI to assess an insurer’s overall financial health.

When to use GNWPI

Use GNWPI when:
* a reinsurance contract explicitly specifies written premiums as the rating base, or
* you need to measure the premium dollar volume subject to reinsurance charges during a reporting period.

For assessments that require earnings recognition or coverage-period matching, earned-premium measures (GNEPI) are more appropriate.