What is unearned premium in SAP (FS-PM - Policy Management)?

SAP Term: unearned premium

• Component: FS-PM

• Component Name: Policy Management

• Description: A premium that has not yet legally been earned. Premiums are not legally earned until the benefit or service for the relevant period has been rendered. Example: A premium of 1000 EUR paid on January 1 as payment for the entire year produces 1000 * n/365 on nth day of the year if the event insured has not occurred.

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• Key Concepts: 
  Unearned premium is a term used in the FS-PM Policy Management component of SAP. It is a type of insurance premium that has been paid but not yet earned by the insurer. This means that the insurer has not yet provided the coverage for which the premium was paid. Unearned premium is calculated as the difference between the total amount of premiums collected and the amount of premiums earned. 
  
  How to use it: 
  In FS-PM Policy Management, unearned premium can be used to calculate the amount of money that an insurer has received but not yet earned. This calculation can be used to determine how much money an insurer has available to cover claims and other expenses. It can also be used to determine how much money an insurer needs to collect in order to cover its expenses. 
  
  Tips & Tricks: 
  When calculating unearned premium, it is important to remember that it is calculated as the difference between total premiums collected and earned premiums. It is also important to remember that unearned premium does not include any interest or other fees associated with the policy. 
  
  Related Information: 
  Unearned premium is closely related to earned premium, which is calculated as the amount of premiums earned by an insurer for providing coverage. It is also related to incurred losses, which are losses that have been incurred by an insurer due to claims or other expenses.