Digital Transformation Wiki
Find answers to all your digital transformation questions with our easy-to-use online resource.

New Business Premium (NBP)

New Business Premium (NBP) refers to the premium acquired from new policies sold by an insurance company within a specific reporting period. It is a key performance indicator for insurance companies, highlighting the success of their sales and marketing efforts, and their capacity to grow and attract new customers.

Understanding New Business Premium

New Business Premium (NBP) is the total amount of premiums collected from new policies sold during a particular period. It does not include premiums from renewals or existing policies. For life insurance companies, NBP typically refers to the first-year premium from these new policies, while for non-life insurance companies, it could encompass the entire premium for policies written during the reporting period.

Importance of New Business Premium

The New Business Premium provides valuable insights into an insurance company's performance and growth potential. A high NBP suggests that the company has been successful in attracting new customers and expanding its business. It also implies a potential for increased premium income in the future, as these new policies continue over their term.

From an investor's perspective, a growing NBP can be a positive indicator of the company's potential for future revenue growth and profitability. Furthermore, analysts and rating agencies often use NBP, among other indicators, to evaluate the performance and growth trajectory of insurance companies.

Factors Affecting New Business Premium

Various factors can affect the NBP of an insurance company:

Marketing and Sales Efforts

Effective marketing strategies and strong sales teams can help insurance companies reach more potential customers and convert them into policyholders, thus increasing the NBP.

Product Offering and Pricing

Innovative insurance products that meet the evolving needs of customers and competitive pricing can attract more new customers, contributing to a higher NBP.

Economic and Market Conditions

Broader economic and market conditions can also impact NBP. For instance, during economic downturns, consumers may cut back on insurance expenses, resulting in lower NBP for insurance companies.

Regulatory Environment

Changes in insurance regulations or taxation can influence the NBP. For instance, favorable tax treatment for certain types of insurance can spur consumer demand and lead to an increase in NBP.

New Business Premium and Policyholder Behavior

While a high NBP indicates strong sales performance and growth potential, insurance companies must also consider policyholder behavior and the quality of the new business. For instance, if many new policyholders lapse their policies prematurely, the insurer might not recover the acquisition costs or achieve the expected profitability, despite a high NBP. Therefore, insurers strive to balance between achieving a high NBP and ensuring the sustainability and quality of the new business.


New Business Premium is a crucial metric in the insurance industry, indicating an insurer's ability to attract new customers and grow its business. However, it's essential for insurance companies to not only focus on increasing NBP but also ensure the quality and sustainability of the new business. By doing so, they can enhance their profitability while maintaining long-term customer relationships.

Relevant content
The painful challenges of digital transformation in financial services
Top 26 digital transformation trends in insurance in 2022
15 ways to onboard and serve customers faster and better in 2022