GWP in insurance: decoding, calculation formula and impact on the policy price

If you've ever taken out car insurance, you've probably come across the term GWP - it is often mentioned in CASCO, OSAGO contracts or when analyzing the insurance market. But what is hidden behind this abbreviation? Why do insurance companies operate so actively with this indicator, and clients often do not even suspect its existence?

In practice GWP (Gross Written Premium) is not just a technical term, but a key financial indicator that directly affects the cost of your policy, the terms of insurance, and even whether they will agree to insure you at all. In this article we will look at:

• 🔍 what GWP means and how it relates to your insurance policy;
• 📊 how this indicator is calculated and what factors influence it;
• 💰 why a high GWP can have both a beneficial and unfavorable effect on the car owner;
• 🚗 how to use knowledge about GWP to save on CASCO or OSAGO.

This topic is especially relevant for those who plan to take out insurance for a new or used car, because understanding the mechanism for forming GWP depends on whether you can reduce the price of the policy without losing coverage.

What is GWP in insurance in simple words

GWP (Gross Written Premium) is the total amount of all insurance premiums (payments from customers) that the insurance company received for a certain period (usually a year), before any fees, taxes or loss payments are deducted.. Simply put, it is the insurer's "gross income" from the sale of policies.

For example, if a company sold 10,000 CASCO policies at 30,000 rubles each, its GWP will be 300,000,000 rubles. But this is not yet pure profit! From this amount the following are then subtracted:

• 💸 payments for insurance cases (if the client was involved in an accident);
• 📑 administrative expenses (salaries, office rent);
• 🏦 commissions to agents and brokers;
• 📉 reserves for future payments.

Why is this important for a car owner? Because insurance companies strive to maintain GWP at a level that will cover all risks and at the same time bring profit. If the GWP is too low (few customers or cheap policies), the company may tighten conditions or raise prices. And vice versa: a high GWP allows you to offer discounts or bonuses.

How is GWP related to the price of your CASCO or MTPL policy?

At first glance, it may seem that GWP is an internal indicator of an insurance company that does not concern the average client. But in reality, it directly affects how much you'll pay for insurance. Here's how it works:

⚠️ Attention: If an insurance company collected 500 million rubles in GWP for policies in a year, but paid out 450 million in losses, its profit will be only 10%. To increase margins, it may raise rates for the next year—and your policy will become more expensive.

Key connections between GWP and insurance costs:

1. Tariff policy. Companies analyze GWP by region, vehicle type and driver category. If for some segment (for example, young drivers in sports cars) losses exceed premiums, tariffs for this group will increase.
2. Bonuses and discounts. With a high GWP and low losses, the company can afford promotions (for example, “CASCO for 50%” for regular customers).
3. Insurance denial. If your profile (car model, driving experience, accident history) belongs to the group with low GWP and high risks, you may not be insured or offered a policy with a deductible.

Example: In 2023, many insurance companies increased CASCO rates for electric cars because the GWP for this segment did not cover the cost of repairing batteries after an accident. Owners Tesla Model 3 or Nissan Leaf felt it in your wallet.

GWP calculation formula and examples for car insurance

The GWP formula is simple:

GWP = Σ (Insurance premiums for all policies) – Returns of premiums to clients

Where:

• Σ (Insurance premiums) — the amount of all payments under contracts for the period;
• Refunds of premiums — money that the company returned to customers upon early termination of contracts.

Let's look at an example for car insurance:

Indicator	Value (RUB)
CASCO policies sold	5 000
Average policy cost	25 000
Total premium collection (5,000 × 25,000)	125 000 000
Returns to customers (termination of contracts)	5 000 000
GWP	120 000 000

But this is a simplified diagram. In practice, GWP calculations include:

• 📅 Period: usually a year, but may be a quarter or a month for operational analysis;
• 🚗 Segmentation: GWP separately for MTPL, CASCO, life insurance, etc.;
• 🌍 Regional factor: in Moscow and St. Petersburg, GWP is higher due to the larger number of cars and the high cost of repairs.

Why doesn't GWP equal company profit?

Even if GWP is high, profits may be minimal or negative. For example, if a company collected 100 million rubles in bonuses, but paid 95 million in losses and spent 10 million on salaries, its net result is a loss of 5 million.

Factors influencing GWP in auto insurance

There are many variables that affect GWP, some of which you as a client can control. Let's look at the key ones:

1. Type of insurance product

GWP by OSAGO and CASCO is formed in different ways:

• 📄 OSAGO: tariffs are regulated by the Central Bank, so the GWP here is stable, but low-margin;
• 🛡️ CASCO: The company itself sets the rates, so GWP can vary greatly depending on risk appetite.

2. Client profile

Insurers divide clients into groups based on risk level. The higher the risk, the higher the premium you will be offered to compensate for possible losses. Criteria:

• 👨‍🦳 Age and experience of the driver (young drivers under 25 years old increase GWP by 20–40%);
• 🚗 Make and model of the car (premium segment or sports cars require large premiums);
• 📍 Region of operation (in large cities GWP is higher due to dense traffic);
• 📉 Accident history (if you get into accidents more often than once every 3 years, the GWP for your policy will increase).

3. Macroeconomic conditions

In 2022–2026, many insurance companies are faced with an increase in GWP due to:

• 💱 Inflation (car repairs have risen in price by 30–50%);
• 🚛 Shortage of spare parts (especially for foreign cars);
• 📈 Increase in the number of accidents (due to the growth of the car fleet).

Install an anti-theft system|Choose a policy with a deductible|Take a defensive driving course|Compare offers from 5+ companies-->

GWP and unprofitability: why insurers refuse policies

If you've ever received an insurance denial or an overpriced offer, it could be because loss ratio — the ratio of payments for losses to GWP. Formula:

Loss Rate (%) = (Loss Payment Amount / GWP) × 100

It is considered normal for loss up to 70–80%. If it is higher, the company loses money. For example:

• 🟢 GWP = 100 million, payments = 70 million → loss ratio 70% (norm);
• 🔴 GWP = 100 million, payments = 95 million → loss ratio 95% (crisis).

In such cases, insurers:

1. They increase tariffs for “problem” groups (for example, BMW M5 or Mercedes-AMG);
2. Strict restrictions are introduced (insurance only with a deductible of 50,000 rubles);
3. Insurance policies are denied to clients with a bad history (frequent accidents, drunk driving).

⚠️ Attention: If your car falls into the 90% loss category, some companies may only offer the policy through a broker - at a premium of 30-50% to the standard rate.

How to Use GWP Knowledge to Save on Insurance

Now that you understand how GWP works, you can use it to your advantage. Here are practical tips:

1. Choose “low-risk” cars

Insurance companies keep statistics on loss rates by model. For example, in 2026 the lowest GWP (and cheapest policies) were:

• 🚗 Lada Vesta (loss ratio ~55%);
• 🚗 Kia Rio (loss ratio ~60%);
• 🚗 Hyundai Solaris (loss ratio ~62%).

But Porsche 911 or Land Rover Defender may have a loss ratio above 120% - and the policy for them will be 2-3 times more expensive.

2. Optimize your policy terms

The less risk the insurance company takes on, the lower its GWP for your policy - and the cheaper the insurance. Methods:

• 🔧 Choose repairs only at dealerships (this reduces the risk of fraud);
• 💰 Set a franchise (for example, 20,000 rubles for damage);
• 🚫 Eliminate risks you don't need (for example, natural disaster insurance if you live in an area without floods).

3. Monitor promotions and bonus programs

When a company has a high GWP and low loss ratio, it can afford discounts. Track:

• 🎁 “CASCO for 50%” promotions (usually at the end of the year, when the company needs to fulfill the GWP plan);
• 🔄 Loyalty programs (for example, a 10% discount for accident-free driving);
• 🤝 Affiliate offers (insurance through car dealerships is sometimes cheaper).

Common mistakes when analyzing GWP

Even experienced car owners sometimes misinterpret GWP data. Here are the most common misconceptions:

1. “High GWP = reliable company”

In fact, a high GWP can mean:

• 📈 Aggressive tariff policy (the company simply takes large bonuses, but it’s not a fact that it pays well);
• 🎯 Focus on the mass market (many cheap policies with low coverage).

Better look at GWP to payout ratio and customer reviews.

2. “GWP equals company profit”

As we have already said, losses, expenses and reserves are deducted from the GWP. Profit is Net Income, not GWP. For example, in 2023, one of the largest insurance companies in Russia had a GWP of 200 billion rubles, but net profit of only 12 billion (6%).

3. “My policy does not affect the company’s GWP”

This is not true! Each policy contributes to the overall GWP. If you:

• 🚗 Got into an accident → increased loss;
• 📑 The contract was terminated early → GWP was reduced;
• 💰 We issued a policy at a discount → reduced the average premium.

All this is taken into account when setting tariffs for the next year.

FAQ: Answers to frequently asked questions about GWP in insurance

❓ What is GWP and how is it different from NWP?

GWP (Gross Written Premium) is the gross premium collected from all policies before returns and fees. A NWP (Net Written Premium) - this is the net premium that remains after deducting returns to customers (for example, upon termination of the contract).

Formula: NWP = GWP – Premium Refunds – Agent Commissions.

❓ Why do different companies have different GWP for MTPL if tariffs are regulated by the state?

Although the basic compulsory motor liability insurance rates are set by the Central Bank, companies can apply odds (for example, for accident-free driving or installing a tracker). In addition, GWP depends on:

• 📍 regional coefficient (in Moscow and St. Petersburg GWP is higher);
• 🚗 number of insured cars in the company;
• 📉 shares of fraudulent payments (which are then compensated at the expense of honest clients).

❓ Is it possible to find out the GWP of your insurance company?

Yes, but not for each client, but for the company as a whole. This data is published:

• 📊 In the insurer’s annual report (section “Main financial indicators”);
• 🌐 On the website of the Central Bank in the “Insurance Market” section;
• 📰 In analytical reviews (for example, from an agency RAEX or Expert RA).

However, you will not find details on specific policies or clients - this is a trade secret.

❓ How does GWP affect the cost of CASCO for electric cars?

Electric cars are a relatively new segment with high risks for insurers. For example:

• 🔋 Battery repair after an accident may cost 500,000–1,000,000 rubles;
• 🛠️ Not all regions have certified service stations for electric cars;
• 📈 Accident statistics for electric cars are not yet sufficient to accurately calculate risks.

Therefore, GWP for this segment often does not cover losses, and companies either inflate rates or refuse to insure such cars.

❓ What should I do if my car is in a “risky” group with a high GWP?

If your car belongs to a category with a high loss rate (for example, a sports car or a rare foreign car), try:

1. 🔍 Find a company specializing in such machines (for example, AlfaInsurance or Ingosstrakh for the premium segment);
2. 💰 Agree to a policy with a high franchise (for example, 100,000 rubles);
3. 🛡️ Get insurance through a broker - they sometimes have access to special rates;
4. 📑 Install additional security measures (tracker, alarm) to reduce risks.