premium capacity

Premium capacity is the total amount of premiums for all exposures that the insurer can safely write in a given period.

On This Page

Additional Information

This figure is also restricted based on state regulations as well as the generally accepted accounting principles applicable to property-casualty (P&C) insurers. The insurer's written premium to policyholder's surplus is often calculated to ascertain this capacity. Reinsurance is frequently purchased to assist insurers in this area.