How are net premiums calculated?
17. Net premiums of a general insurer are calculated by reducing the insurer’s gross premium income of a year by : (a) acquisition costs that relate to the gross premium income; and (b) reinsurance premiums incurred by the insurer in the income year that relate to the gross premium income. 18. Details of which expenses may be regarded as ‘acquisition costs’ for income tax purposes and offset against gross premiums of an income year, are provided at paragraphs 65 and 74 to 75. Similarly, paragraphs 79 and 90 to 93 explain which reinsurance premiums may be offset against gross premium income. Why are net premiums (not gross premiums) apportioned? 19. In essence, net (rather than gross) premium income of a year is apportioned in determining the extent of unearned premium income that relates to a later year because : ยท The amount of unearned premium income that relates to a later year (which is derived for income tax purposes and assessable in that later year) is the portion of premium inc
