An insurance premium is the amount that an individual (Insured) will be required to pay to the Insurance company to buy a travel policy cover. The insurance company collects the premium from all their customers and put that into an investment pool against the risk being insured. If the Insured doest not submit any claim during the policy period, this becomes an income for the Insurer. However, if any customer claims any damages against their policy, this pool of money is used to pay the cost of those damages insured by the customer.
Insurance companies have Underwriters who analyze company's insurance products and set aside the premium rates based on a number of factors such as geography, coverage type, the possibility of damages or risk involved, the age of Insured, and the market competition. The premium may change on time to time basis.