Gross Premium Expense Loading Calculator
Load a net premium with a fixed expense and a variable expense ratio to obtain the gross premium.
Description
Calculate a gross premium by adding fixed expenses and allowing for expenses proportional to the gross premium.
Gross Premium Expense Loading helps you calculate a gross premium by adding fixed expenses and allowing for expenses proportional to the gross premium.
Use this calculator to convert a net premium or benefit cost into a simplified gross premium when expenses contain a fixed amount plus a percentage of the resulting premium.
When to use Gross Premium Expense Loading
Use this calculator to convert a net premium or benefit cost into a simplified gross premium when expenses contain a fixed amount plus a percentage of the resulting premium.1
How the calculation works
Add the net premium and fixed expense, then divide by one minus the variable expense ratio. This algebra ensures that the stated percentage of the calculated gross premium is available for variable expenses.2
Gross premium = (net premium + fixed expense) / (1 − variable expense ratio) 1Inputs and interpretation
Use consistent currency and payment frequency for net premium and fixed expense. Enter the variable loading as a percentage below 100 percent; a 100 percent loading leaves nothing to fund benefits or fixed costs.
Limitations and assumptions
This is an expense-loading identity, not a complete pricing model. It omits commissions by duration, taxes, capital costs, profit, contingencies, lapses, investment margins, premium frequency, and regulatory constraints.
References
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Supplementary Notes for Actuarial Mathematics for Life Contingent Risks — Society of Actuaries
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Insurance — Wikipedia contributors
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