Outgoing Premiums and Return Premiums from Reinsurance

D

Outgoing premiums less return premiums arising from reinsurance purchased from other insurance entities are referred to as "Ceded reinsurance premiums."

Reinsurance is a practice in the insurance industry where insurance companies transfer a portion of their risk to other insurance entities. The company that transfers the risk is known as the "ceding company," while the company that assumes the risk is called the "reinsurer."

When an insurance company purchases reinsurance, it pays a premium to the reinsurer. This premium is known as the "ceded reinsurance premium." It represents the amount of money the ceding company pays to the reinsurer to assume a portion of its insurance liabilities.

The ceding company calculates the ceded reinsurance premium by subtracting the return premiums from the outgoing premiums. Outgoing premiums refer to the total amount of premiums collected by the insurance company from policyholders. Return premiums, on the other hand, are premiums refunded to policyholders due to cancellations, adjustments, or other factors.

Therefore, the formula for ceded reinsurance premiums is:

Ceded Reinsurance Premiums = Outgoing Premiums - Return Premiums

It's important to note that ceded reinsurance premiums are specific to the ceding company, as they represent the premiums paid by the company to the reinsurer. This distinguishes them from assumed reinsurance premiums (option C), which would be the premiums received by the company assuming the risk.

In summary, the correct answer to the question is option D: Ceded reinsurance premiums. These premiums represent the outgoing premiums minus the return premiums associated with reinsurance purchased by the ceding company from other insurance entities.