when an insurance company enters into a reinsurance agreement it reduces its overall risk exposure by ceding some risks to a reinsurer in exchange for taking on these risks the reinsurer is entitled to a portion of the insurer s premiums 
in a non proportional reinsurance agreement the amount of premiums that the reinsurer is entitled to be determined by a fixed rate this rate is multiplied by a base premium which represents the dollar amount of an insurer s premiums to which the reinsurer is entitled special considerationsthe way that the subject premium is calculated is defined in the reinsurance contract the parties agree to the reinsurance rate premium percentage that will be applied to the base premium and whether the base premium also called the subject premium or underlying premium will be calculated using earned or written premiums if earned premiums are chosen the calculation uses gross net earned premium income gnepi as the base this is the most common rating base for an excess of loss reinsurance if the agreement uses written premiums then gnwpi is used gross net written premium income is calculated by taking the ceding insurer s premium income rather than premium receipts the premiums are net meaning that any cancelations refunds and premiums paid for reinsurance are deducted and gross because expenses are not deducted if the amount of risk taken on by the reinsurer increases over time the written premium income will be higher than earned premium income gnwpi vs gross broking incomegross net written premium income is a good measure of how well an insurer is doing but it doesn t consider earnings on investments such as equities or bonds it also doesn t take into account any assets that the insurer has that s why many firms are more interested in broking gross income which does include those figures so while gnwpi is a good indicator you cannot rely on it solely to ascertain an insurer s financial health 