--- title: "📈 How to calculate a premium : additional costs" description: "📈 How to calculate a premium additional costs\n\n📌 These tutorials will offer you all the basics you need to master reinsurance." image: https://blog.arundore.com/hubfs/Vignette_YT_ep8%20EN.jpg --- [![Arundo_Logo_RVB-1](https://blog.arundore.com/hs-fs/hubfs/Arundo_Logo_RVB-1.png?width=115&height=76&name=Arundo_Logo_RVB-1.png)](https://www.ccr-re.com/en/home) - [News](https://blog.arundore.com/en) - [Reinsurance Tutorials](https://info.arundore.com/reinsurance-tutorials) - [Women of Power](https://info.arundore.com/women-of-power) - [MTPL Losses France Study](https://info.arundore.com/assessing-the-losses-of-severe-personal-injury-victims-in-motor-liability-cases) - [Arundo Re Talks](https://www.arundore.com/en/arundo-re-talks) - [français-FRANCE](https://blog.arundore.com/fr/comment-sont-calculés-les-surcoûts-des-primes-dassurance-) [Home](https://blog.arundore.com/) [The reinsurance and insurance blog of Arundo Re](https://blog.arundore.com/en) 📈 How to calculate a premium : additional costs 11 December 2023 2 min read # 📈 How to calculate a premium : additional costs ## Reinsurance Tutorials #8 - Season 3 Hi everybody 👋   Today, and for the eighth Reinsurance Tutorials video of the season, we will talk about "How to calculate a premium : additional costs"   This subject will be addressed by CCR Re experts Perrine Carolo and François Cahu.   Let’s start! ⏬   **\[François Cahu\] :** Hello I am François Cahu, I am Senior Vice President Non-Life Treaties Central and Northern Europe. **\[Perrine Carolo\] :** Hi, I am Perrine Carolo, I am Underwriter & Actuary on Life & Health France and Europe. **\[François\] :** We are together today to see how to calculate a premium. **\[Perrine\] :** There is “do and don’t”. **\[François\] :** And you have to think about the additional costs. **\[Perrine\] :** Let’s start with a definition of the **pure premium** (or net premium) : calculated according to actuarial methods, this part of the premium aims to **cover the cost** of the risk**.** It is usually calculated on the basis of historical claims data, or actuarial models.   **\[François\] :** To obtain the full reinsurance charged premium, various elements must be added, according to the contract features, and the underlying risks.   **\[François\] :** The reinsurer’s fees are used to **cover operating costs,** their value depends on profitability targets. They are defined by the reinsurer for all risks, but a differentiated approach per line of business can be determined.   **\[Perrine\] :** In proportional treaties, the reinsurance commission corresponds to the remuneration of the cedant. It is due by the reinsurer as a **compensation** of the insurer’s development and distribution costs of the insurance product. This commission is usually a percentage of the reinsurance premium, but can also depend directly on the insurer’s fees. They can be **fixed**, or performance-based: here, the commission will increase if the loss ratio gets better, but decrease if the amounts of claims are higher than expected.   **\[François\] :** A broker can be part of the reinsurance deal. **Brokerage fees** are usually a percentage of the reinsurance premium.   **\[Perrine\] :** Depending on regulation for each risk and geographic area,some taxes may be **applied**. As an example, in France, health insurance products are subject to a 13% tax, which can be increased to 20% depending on the characteristics of the product.   **\[François\] :** In case of **prepaid reinstatement**, the reinsurance premium must include the cost of potential claims (prepaid reinstatement = reinstatement that does not lead to the payment of an extra premium to reinstate the cover).   **\[Perrine\] :** The treaty can include a **NCB** (Non Claim Bonus) **clause**: if no claim has occurred, during the validity period of the treaty, the reinsurance premium can be reduced by a contractually agreed percentage.   **\[François\] :** Last but not least, if there is a **profit commission** in the treaty, its cost must be included in the premium calculation. This profit commission can be included in proportional treaties: if there is a profit (if the reinsurance premium is higher than claims, the positive result is shared between insurer and reinsurer, based on a split contractually **agreed.** If the result is negative, no profit commission is due to the insurer, and the negative result is usually postponed to next year’s account which is called loss carry forward.   **\[Perrine\] :** This is already the end of the video. **\[François\] :** Now, how to calculate a premium has no secret for you.   **\[Perrine\] :** Thanks a lot for watching us, goodbye.     Bye for now 👋 **[![ See all videos ](https://no-cache.hubspot.com/cta/default/6458234/8fb8cd40-e31d-4fca-96fd-7452394cd208.png)](https://cta-redirect.hubspot.com/cta/redirect/6458234/8fb8cd40-e31d-4fca-96fd-7452394cd208)**   --- ## 📺 More episodes are coming... Subscribe now to receive them by email! 📥   [mailto:?subject=📈%20How%20to%20calculate%20a%20premium%20:%20additional%20costs&BODY=I%20found%20this%20article%20interesting%20and%20thought%20of%20sharing%20it%20with%20you.%20Check%20it%20out:%20https://blog.arundore.com/en/how-to-calculate-a-premium-additional-costs](mailto:?subject=📈%20How%20to%20calculate%20a%20premium%20:%20additional%20costs&BODY=I%20found%20this%20article%20interesting%20and%20thought%20of%20sharing%20it%20with%20you.%20Check%20it%20out:%20https://blog.arundore.com/en/how-to-calculate-a-premium-additional-costs) ## Latest articles #### 7 October 2025 ### [🌞 Local features seen by our LATAM Underwriters](https://blog.arundore.com/en/local-features-seen-by-our-latam-underwriters) Another meeting with The Reinsurance Tutorials, episode #9 - Season 4 ### [+](https://blog.arundore.com/en/local-features-seen-by-our-latam-underwriters) #### 16 September 2025 ### [🌎 LATAM Non-Life Reinsurance: A 24-Market Masterclass](https://blog.arundore.com/en/latam-non-life-reinsurance-a-24-market-masterclass) Penultimate meeting with The Reinsurance Tutorials, episode #8 - Season 4 ### [+](https://blog.arundore.com/en/latam-non-life-reinsurance-a-24-market-masterclass) #### 27 August 2025 ### [🦠 LATAM Life/ Non-Life Reinsurance: Assessing Pandemic Impacts Masterclass](https://blog.arundore.com/en/latam-life/-non-life-reinsurance-assessing-pandemic-impacts-masterclass) Seventh meeting with The Reinsurance Tutorials, episode #7 - Season 4 ### [+](https://blog.arundore.com/en/latam-life/-non-life-reinsurance-assessing-pandemic-impacts-masterclass) #### 5 August 2025 ### [🏜️ Local features seen by our MENA Underwriters](https://blog.arundore.com/en/️-local-features-seen-by-our-mena-underwriters) Sixth meeting with The Reinsurance Tutorials, episode #6 - Season 4 ### [+](https://blog.arundore.com/en/️-local-features-seen-by-our-mena-underwriters) [View all articles](https://blog.arundore.com/en) **Arundo Re** 6 RUE FAVART 75002 PARIS - FRANCE [Contact us](https://www.arundore.com/en/contact) [Job opportunities](https://www.welcometothejungle.com/en/companies/arundo-re) [![Arundo_Logo_RVB-1](https://blog.arundore.com/hs-fs/hubfs/Arundo_Logo_RVB-1.png?width=202&height=133&name=Arundo_Logo_RVB-1.png)](https://www.arundore.com/en/)   [Terms of use & legal notice](https://www.arundore.com/en/legal-notice) I[Personal data protection](https://www.arundore.com/en/gdpr) I © - Arundo Re 2026 All rights reserved ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "CCR Re", "url" : "https://blog.arundore.com/en/author/ccr-re" }, "dateModified" : "2023-12-11T14:31:15.331Z", "datePublished" : "2023-12-11T14:31:15.000Z", "headline" : "📈 How to calculate a premium : additional costs", "image" : [ "https://blog.arundore.com/hubfs/Vignette_YT_ep8%20EN.jpg" ], "mainEntityOfPage" : { "@id" : "https://blog.arundore.com/en/how-to-calculate-a-premium-additional-costs", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.arundore.com/hubfs/Arundo_Logo_RVB-2.png" }, "name" : "Arundo Re" } } ```