Net premiums Law and Legal Definition
Net premium means the gross premiums including the amount that is required to pay the insurance liability on its becoming due, without paying any expenses or contingent charges. Therefore, net premium will be a net of reinsurance premiums payable, or commission, brokerage, taxes, or any combination of these.
The term 'net premiums' is defined under 26 USCS § 834 (e)(1) as gross premiums (including deposits and assessments) written or received on insurance contracts during the taxable year less return premiums and premiums paid or incurred for reinsurance. Amounts returned where the amount is not fixed in the insurance contract but depends on the experience of the company or the discretion of the management shall not be included in return premiums but shall be treated as dividends to policyholders.