In the world of insurance and risk management, few financial metrics are as important—or as misunderstood—as gross written premium (GWP) and net written premium (NWP) income. With the Australian insurance sector evolving rapidly in 2025, understanding these two figures is no longer just for actuaries and CFOs. Every business owner, finance manager, and stakeholder should know what they mean and how they influence premiums, coverage, and the insurer’s financial stability.

Decoding Gross vs Net Written Premium: The Core Differences

At a glance, gross written premium (GWP) represents the total amount of premium an insurer books from policyholders within a set period—before accounting for any reinsurance or deductions. Net written premium (NWP), on the other hand, is what remains after the insurer cedes part of that risk (and premium) to a reinsurer.

Gross Written Premium (GWP): The total premium income from all policies written during the period, before any deductions.
Net Written Premium (NWP): The portion of GWP retained by the insurer after deducting premiums paid to reinsurers.

This difference is more than an accounting nuance. GWP highlights an insurer’s sales power and market reach, while NWP reflects its actual risk exposure and revenue base. For example, if an Australian insurer writes $100 million in policies but cedes $40 million to reinsurers, its GWP is $100 million, but its NWP is just $60 million.

Why It Matters: Strategic Implications for 2025

2025 is shaping up as a transformative year for Australia’s insurance industry. New APRA regulations, climate-related risk adjustments, and the ongoing digitalisation of insurance products are all shifting how insurers balance growth and risk.

Regulatory Oversight: APRA has introduced stricter guidelines on capital adequacy and risk retention, making NWP a more critical metric than ever. Insurers with high GWP but low NWP may face tougher scrutiny over their risk transfer strategies.
Market Competition: Digital-first insurers are leveraging data and AI to price policies more competitively, impacting both GWP and NWP figures. For instance, insurtech firms can write more policies at lower cost, but their retention strategies differ from traditional players.
Natural Disaster Exposure: With 2025 expected to bring heightened climate volatility, insurers must carefully calibrate how much risk they retain versus cede. A surge in catastrophic events—like the floods seen in Queensland and NSW in early 2025—can quickly turn aggressive GWP growth into losses if not matched by prudent reinsurance.

Real-world example: In early 2025, a major Australian insurer reported a 15% year-on-year increase in GWP thanks to a surge in SME cyber insurance policies. However, their NWP only rose 5%, as they opted to cede more risk to global reinsurers due to uncertainty around cyber incidents. This strategic move protected their balance sheet but also reduced their potential profit margin.

How Businesses Can Use GWP and NWP Insights

It’s not just insurers who should pay attention. Australian businesses purchasing insurance—whether for property, cyber, or liability—can use GWP and NWP data to assess an insurer’s financial health and appetite for risk.

Financial Strength: A large gap between GWP and NWP may indicate heavy reliance on reinsurance, which can buffer against major shocks but also suggests the insurer is less willing to bear risk directly.
Premium Pricing: Insurers with higher NWP may offer more stable premium pricing, as they’re retaining more risk and have greater incentive to manage claims efficiently.
Claims Experience: In 2025, APRA’s transparency requirements mean more insurers must disclose their GWP and NWP ratios. Businesses can use this data when choosing an insurer, looking for those with a balanced approach to risk retention and transfer.

For example, a construction firm in Victoria facing rising insurance premiums in 2025 can review insurers’ GWP/NWP ratios to identify those with a proven track record of managing large, complex risks in-house—potentially leading to better claims outcomes and service.

The Bottom Line: A Key Metric for a Dynamic Insurance Market

Gross and net written premium income are more than just numbers on a balance sheet. They’re vital indicators of an insurer’s growth, stability, and risk appetite. As 2025 brings fresh challenges and opportunities—from regulatory updates to climate shocks—Australian businesses and insurers alike should keep a close eye on these metrics to make smarter, more resilient financial decisions.