Premium income is the consideration income that the insurance company collects from the insured for fulfilling the obligations stipulated in the insurance contract. It is the most important capital inflow channel for insurance companies and the most important source of funds for insurance companies to fulfill their insurance responsibilities. Insurance companies use the time difference between capital inflow and outflow to form profits and losses through centralized and decentralized management of capital utilization and insurance risks, which is obviously different from other industries. At the same time, there are differences between short-term insurance business and long-term insurance business in the connotation of premium income, which forms the basic characteristics of insurance income.
Premium income has two connotations: on the one hand, premium income is formed because the insured pays the insurance premium to the insurer according to the insurance contract. From the point of view of economics, insurance premium is the fund shared by the insured to form the same risk protection; From a legal point of view, insurance premium is the price paid by the insured to get the claim.
On the other hand, premium income is the most important capital inflow channel for insurance companies and the most important source of funds for insurance companies to fulfill their insurance responsibilities. From the perspective of assets, the collection of premiums has formed the inflow of insurance funds, which is the main driving force for the growth of insurance assets; From the perspective of liabilities, because the premise of insurance capital inflow is that the insurer should fulfill the agreed insurance liability, the result of capital inflow has caused the increase of insurance liabilities.
The economic effect brought by premium income is the inflow of cash assets. Insurance companies use the time difference between capital inflow and outflow to form profits and losses through capital utilization and centralized and decentralized management of insurance risks, which is obviously different from other industries. At the same time, there are differences between short-term insurance business and long-term insurance business in connotation, which forms the basic characteristics of insurance income.