Premium
The price of insurance, paid in installments or lump sums, set by underwriting and regulated by states.
Overview
The premium must cover expected claims, expenses such as commissions, taxes, and operations, and leave a margin, averaged over pools of similar risks. Experience rating moves individual premiums over time through auto surcharges and workers comp modifiers, while community rating in health insurance prices a region together regardless of health. Actuaries build rate filings with loss trends and catastrophe loadings for regulators to approve in admitted markets. Missing payments risks cancellation or lapse, and premium finance arrangements spread large commercial payments for a fee. Premium is the consideration that keeps the promise alive: without it there is no contract, and reinstatement after lapse often requires more than money alone.
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