Net Premium

  • The method of computation of "net premium" is the great insurance secret.
    • We doubt if any legislator or any judge ever solved the problem or guessed the secret. (p66)

1917 - Book - A License to Steal: Life Insurance, the Swindle of Swindles : how Our Laws Rob Our Own People of Billions, by Philander Banister Armstrong - [305p-GooglePlay]

  • (p323) - 14.4 Universal Life Insurance Model Regulation
    • Flexible premium products introduce special valuation problems using traditional methods in that some assumption as to future premiums is required.
    • The typical "present value of future benefits less the present value of future net premiums" formula is challenging to apply to flexible premium universal life policies, since neither "future premiums" nor "future benefits" are known for any particular policy.

2018 - Book - Statutory Valuation of Individual Life and Annuity Contracts | 5th Edition -- by Donna Claire, Lombardi and Summers

  • ... when we come to value policies afterwards is a very different question indeed; and I, for one, cannot get over the dictum laid down by Professor De Morgan, that we have to deal with facts.
    • A man is aged x.
    • Well, you must charge yourself with the present value of the assurance upon that man, an credit for a portion of his premiums, that portion being what is conventionally known as the net premium.
    • Now what is net premium?
      • There has been a great deal of paltering with that.
    • Any person that will look carefully into the valuations will find that what some actuaries call a net premium is a net premium at variance with the data which they profess to be valuing.
      • That is not net premium, and it has done much detriment in many companies.
    • But that is a different question altogether.

1875 10 - Actuarial Paper - The Measure of Expenses in Life Assurance Companies, by James R. Macfadyen, Journal of the Institute of Actuaries and Assurance Magazine, Vol. 19, No. 3, pp. 153-174 - (23p - JSTOR)