Rating and Rate making
Rate making refers to the pricing of insurance and the calculation of insurance premiums. The premium paid by the insured is the result of multiplying a rate determined by actuaries by the number of exposure units, and then adjusting the premium by various rating factors (a process called rating). A rate is the price per unit of insurance. An exposure unit is the unit of measurement used in insurance pricing, which varies by line of insurance. For example, when you buy gas for your car, the rate per gallon multiplied by the number of gallons purchased equals the amount paid. Likewise, in property and casualty insurance, the rate times the number of exposure units determines the premium paid. Rate making in property and ...
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