Estimated premium income

Estimated premium income is the projection a cedant gives the reinsurer at placement, on which the minimum and deposit premium is computed before the actual base is known. It also frames the reinsurer's exposure analysis, which relates the capacity sold to an expected volume of business. The problem it solves is pricing a year that has not happened: the reinsurer must set a price and commit capacity in January on a portfolio that will only exist by December. The quality of that estimate is therefore as much a matter of relationship as a technical parameter. A cedant that systematically understates its income pays less on deposit but marks itself out through recurring adjustments and loses credibility at the next renewal; one that overstates it ties up cash for nothing. Recent treaties frame the gap with a variation clause, giving the reinsurer a right to revise the rate if actual income departs from the estimate by more than an agreed margin.

A cedant states an estimated premium income of 95 million euros for 2026. The actual base comes in at 128 million, an overshoot of 35 percent. The treaty carried a variation clause beyond 20 percent: the reinsurer exercises its revision right and lifts the rate from 3.4 to 3.9 percent on the whole base, taking the premium from 4.35 to 4.99 million euros.

Estimated premium income, EPI, Assiette prévisionnelle, Prévision de primes