YOU ASK:
What is the definition of Direct Premiums?
WE ANSWER:
Direct Premiums are premiums that the insurance company collects directly from the policy holders. Direct premiums refer to the premiums prior to any deductions or adjustments made. Premiums are money collected in order for the insurance company to provide continued coverage for a certain risk, such as the loss of a life or loss or damage to property of a person or entity.
The insurance companies will usually share the risk in one policy especially if the covered amount is substantial. It will ask other insurance companies to insure a portion of the risk. This is what is called reinsurance. The insurance company deducts from the direct premiums in order to pay the premiums of the reinsurers.
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