Earned premium on the NAIC Annual Statement is calculated as

Earned premium on the NAIC Annual Statement is calculated as

• A. The end-of-year unearned premium reserve minus the beginning-of-year unearned premium reserve
• B. The sum of the year's written premium plus the end-of-year unearned premium reserve, less the beginning-of-year unearned premium reserve
• C. The difference between written premium and the unearned premium reserve at year-end
• D. The sum of the year's earned premium plus the end-of-year unearned premium reserve

Answer: (B)

Earned premium represents the portion of premiums that has been earned during the period. In the NAIC Annual Statement, this goes beyond just the new premiums written; it accounts for how much of those premiums were already unearned at the start and how much remains unearned at the end of the year. The calculation used on the statement adds the premiums written for the year to the end-of-year unearned premium reserve and then subtracts the beginning-of-year unearned premium reserve. This captures the new premiums earned during the year while offsetting the unearned portions carried into the year and the unearned portion that still remains at year-end. If the end-of-year unearned premium reserve is higher or lower than the beginning-of-year reserve, that movement reflects the portion of premium that was earned versus left unearned over the period, and the formula renders the earned amount accordingly.

Earned premium represents the portion of premiums that has been earned during the period. In the NAIC Annual Statement, this goes beyond just the new premiums written; it accounts for how much of those premiums were already unearned at the start and how much remains unearned at the end of the year. The calculation used on the statement adds the premiums written for the year to the end-of-year unearned premium reserve and then subtracts the beginning-of-year unearned premium reserve. This captures the new premiums earned during the year while offsetting the unearned portions carried into the year and the unearned portion that still remains at year-end. If the end-of-year unearned premium reserve is higher or lower than the beginning-of-year reserve, that movement reflects the portion of premium that was earned versus left unearned over the period, and the formula renders the earned amount accordingly.