Premium accounting is, in insurance, the set of entries by which an insurer records the price of its policies. When a policy begins, the full premium is recorded as written premium and as an amount receivable from the policyholder or broker. Revenue is not recognised at once. Under accrual accounting the premium is earned evenly, or in line with the pattern of risk, over the period of cover, and the portion relating to future cover is held as an unearned premium reserve, a liability comparable to unearned revenue.
The function also covers instalments, cancellations and refunds, commission due to intermediaries, premium taxes, and the share passed to reinsurers under a reinsurance cession, which is shown as ceded premium. Overdue balances are reviewed for collectability. Under IFRS 17, premiums received feed the measurement of the liability for remaining coverage, and insurance revenue replaces written premium as the headline figure.