Subject premium base
The cedant premium to which a non-proportional treaty's rate is applied.
Subject premium is the volume of cedant premium to which the treaty rate is applied to get the reinsurance premium. Its definition is among the most technical and most argued-over points in a treaty, because it decides what counts: gross or net of producer commission, net or not of cessions to other treaties, with or without taxes, management fees, ancillary lines and business assumed from other insurers. The most common formulation, gross net premium income, takes gross premium less only cessions to inuring reinsurance. A rate means nothing unless it applies to a figure both parties define the same way and that stays stable from year to year. If the base shifts every time the cedant reorganizes internally, comparing rates becomes meaningless. That is why well-drafted treaties define the base by named accounting lines rather than by a general formula.
A cedant presents a 2026 base of 240 million euros at a 2.8 percent rate. The reinsurer notices that the definition now leaves out a subsidiary with 31 million of premium that sat inside the perimeter the year before. On a restated base of 271 million, the equivalent rate would be 2.48 percent, so the 4 percent price cut shown at renewal is actually a 15 percent cut.
Follow the research
One letter a week. First, the week's underwriting note, when one is published: a dated, argued decision, signed by Paul Bernardski. Then what the observatory published on cyber risk, political risk and insurance. No account, no tracking.
No spam, one-click unsubscribe, no data ever sold.