Valuation Premium

Posted in Finance, Accounting and Economics Terms, Total Reads: 835

Definition: Valuation Premium

Valuation Premium is a premium paid by the insurer to the insurance company. It is an excess amount paid for the brand and services of the companies. The reviews of the multiple comparative between the peers of the company, will give the amount of premium charged by an company.

The main the buyer pays the valuation premium are Specific entry barriers to other competitors, Higher margins than the peers, Specific legal technology, Trust between the parties and accessibility of the company.

It is also a rate by LIC based on reserve requirement of the company. The minimum amount is to pay out their payouts and covers all their liabilities. It ensures the assets availability of the company. If the historical data indicates lower premium for an individual, then this is made for an individual’s ignoring the statically calculations.

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