What is Original Insurance Premium Income?

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Original insurance premium income refers to the insurance premiums collected by the insurance company from the insured during the insurance period as stipulated in the insurance contract. Original insurance premium income is one of the main sources of income for insurance companies and is also an important indicator of their operating performance.

Definition

Original insurance premium income refers to the insurance fees collected by an insurance company from the insured during the insurance period as agreed in the insurance contract. It is one of the main sources of income for insurance companies and a key indicator of their business performance.

Origin

The origin of the insurance industry can be traced back to ancient maritime trade, where merchants shared risks to protect their goods. Over time, insurance evolved into a formal financial service, with companies systematically collecting premiums to provide coverage.

Categories and Features

Original insurance premium income can be categorized into life insurance, property insurance, and health insurance. Life insurance typically involves long-term contracts with stable premium income; property insurance often involves short-term contracts with more volatile premium income; health insurance varies with changes in medical expenses. Each type of insurance premium income reflects its specific risks and market demands.

Case Studies

Case 1: Ping An Insurance significantly increased its original insurance premium income in 2020 by enhancing the market promotion of its health insurance products. By analyzing market demand, Ping An successfully attracted more customers, increasing its revenue sources. Case 2: AIA improved customer satisfaction and premium income in 2019 by optimizing its life insurance product portfolio. By offering more competitive products, AIA captured a larger market share.

Common Issues

Investors often misunderstand the relationship between original insurance premium income and net profit. While premium income is a major source of revenue for insurance companies, it does not directly equate to net profit, as claims, operating costs, and other expenses must be deducted. Another common issue is excessive optimism about premium income growth, overlooking the importance of market competition and risk management.

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Zero-Rated Goods

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Zero-Floor Limit

The term "zero-floor limit" refers to a policy whereby merchants are required to obtain authorization for every transaction processed at their store, regardless of its size. By contrast, some stores only require authorization for transactions that are above a certain size, with that size threshold being known as the store's floor limit.

Zero-Floor Limit

The term "zero-floor limit" refers to a policy whereby merchants are required to obtain authorization for every transaction processed at their store, regardless of its size. By contrast, some stores only require authorization for transactions that are above a certain size, with that size threshold being known as the store's floor limit.

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Lisbon Treaty

The Lisbon Treaty, also known as the Treaty of Lisbon, updated regulations for the European Union, establishing a more centralized leadership and foreign policy, a proper process for countries that wish to leave the Union, and a streamlined process for enacting new policies.The treaty was signed on December 13, 2007, in Lisbon, Portugal, and amended the two previous treaties that established the foundation for the European Union.

Labor Intensive

The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.

Labor Intensive

The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.

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Fast-Moving Consumer Goods

Fast-moving consumer goods (FMCGs) are products that sell quickly at relatively low cost. FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and confections) or because they are perishable (e.g., meat, dairy products, and baked goods).They are bought often, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover on store shelves. The largest FMCG companies by revenue are among the best known, such as Nestle SA. (NSRGY) ($99.32 billion in 2023 earnings) and PepsiCo Inc. (PEP) ($91.47 billion). From the 1980s up to the early 2010s, the FMCG sector was a paradigm of stable and impressive growth; annual revenue was consistently around 9% in the first decade of this century, with returns on invested capital (ROIC) at 22%.

Negotiable Instruments

A negotiable instrument is a signed document that promises a payment to a specified person or assignee. In other words, it is a formalized type of IOU: A transferable, signed document that promises to pay the bearer a sum of money at a future date or on-demand.Common examples of negotiable instruments include personal checks, cashier's checks, money orders, certificates of deposit (CDs), promissory notes, and traveler's checks. The person receiving the payment, known as the payee, must be named or otherwise indicated on the instrument. Because they are transferable and assignable, some negotiable instruments may trade on a secondary market.

Negotiable Instruments

A negotiable instrument is a signed document that promises a payment to a specified person or assignee. In other words, it is a formalized type of IOU: A transferable, signed document that promises to pay the bearer a sum of money at a future date or on-demand.Common examples of negotiable instruments include personal checks, cashier's checks, money orders, certificates of deposit (CDs), promissory notes, and traveler's checks. The person receiving the payment, known as the payee, must be named or otherwise indicated on the instrument. Because they are transferable and assignable, some negotiable instruments may trade on a secondary market.