Difference between written premium vs return premium in GL Insurance

 In general liability (GL) insurance, there are two terms related to premiums: written premium and return premium. Here's the difference between the two:

Written Premium: The written premium refers to the total amount of premium charged by an insurance company to provide coverage for a specific period, typically a policy term. It represents the initial premium payment made by the policyholder to secure insurance coverage. The written premium is based on various factors, including the type of business, risk exposure, coverage limits, deductible amounts, and other underwriting considerations. It is determined at the inception of the policy and is typically paid upfront or in installments throughout the policy period.

Return Premium: The return premium, also known as a refund premium or earned premium return, is the portion of the written premium that is returned to the policyholder if the policy is canceled before its expiration date. It represents the unearned portion of the premium, as the insurance coverage has not been provided for the entire policy period. The return premium is calculated based on the time remaining on the policy and the insurance company's cancellation policies. It is often pro-rated, meaning the policyholder receives a refund for the unused portion of the premium.

To summarize, the written premium is the total premium amount paid by the policyholder to secure insurance coverage, while the return premium is the portion of the written premium that is refunded if the policy is canceled before its expiration.

Policy change return premium:

For example New Business premium for a GL policy was $5000. Then again a policy change was performed on the same policy & exposure value was reduced. Due to reduced exposure value negative premium of -$2000 got generated. This negative premium which got generated in a policy change is return premium. Initial exposure was 1000,000 & it was reduced 600000.

Not only reducing exposure. We can delete location, delete any premium bearing form, delete exposure etc.