Question
How does an undertaking take account of any discounts it applies to its premiums to its policyholders when calculating the volume measure for premium risk?
EIOPA answer
The volume measure for premium risk equals the premiums to be earned after the application of any adjustment, including discounts. If an undertaking discounts its written premium from 100 to 90 for a one-year contract, the premium to be earned for this contract in the calculation of the volume measure, Ps, equals 90.