Gross premiums and Net premiums

[Samarth Gujral]

Hi. I have few doubts regarding gross and net premiums.
1) Why do we ignore bonuses while calculating net premiums considering we include past bonuses while calculating the net premium reserves?
2) What is the difference between Gross premiums and Net premiums for with-profits policies? Is it the money we receive for all our expenses and for both past and future bonuses related to those policies?
3) What is the difference between Gross premium reserve and Net premium reserve? Is it the reserve which we have kept for covering all our relative expenses and for future bonuses only?

 

[Mohit Gulati]

if its a with profit policy so its the discretion of company whether to declare or not
to declare to bonus, so that is why while calculating the net premium we will not
consider the bonus in with profit policy but while calculating the gross
premium or gross premium reserve we will take the bonus in with profit policy also.t

since the company does not know at which rate bonus will be declared each year
even company is not sure whether it will declare the bonus or not that is why the
company does not consider the bonus while calculating net premiums but if gross
premium or reserve is calculated for with profit policy so company will take the
bonus as has been stated in question