Rating manuals

Question 1

rating manual

Answer 1

insurer’s documentation of (risk, premium)

Question 2

Information needed to calculate the premium for a given risk

Answer 2

1. Rules
2. Rate pages (i.e. base rates, rating tables, and fees)
3. Rating algorithm
4. Underwriting guidelines

Question 3

base risk

Answer 3

specific risk profile pre-defined by the insurer

Question 4

base rate

Answer 4

rate that is applicable to the base risk

Question 5

Rating variables: Personal Automobile

Answer 5

Driver Age and Gender, Model Year, Accident History

Question 6

Rating variables: Homeowners

Answer 6

Amount of insurance, age of home, construction type

Question 7

Rating variables: Workers Compensation

Answer 7

Occupation class code

Question 8

Rating variables: Commercial General Liability

Answer 8

Classification, Territory, Limit of liability

Question 9

Rating variables: Medical malpractice

Answer 9

Specialty, territory, limit of liability

Question 10

Rating variables: Commercial automobile

Answer 10

Driver class, territory, limit of liability

Question 11

Rating algorithms

Answer 11

combine components in the rules and rate pages to calculate the overall premium charged for risk

Question 12

underwriting guidelines

Answer 12

a set of company-specific criteria that can affect decisions made prior to calculating a rate or an alter aspects of the premium calculatin

Question 13

What is underwriting guidelines used to specify

Answer 13

1. Decision to accept, decline or refer risks
2. Company placement
3. Tier placement
4. Schedule rating credits/debits

Question 14

rules

Answer 14

1. Key definition and summaries of what the contract covers
2. How to classify risks for premium rating
3. Information on optional coverages
4. May contain underwriting guidelines (or provided separately)

Question 15

company placement

Answer 15

Insurance groups utilize distinct companies within their corporate structure to sell similar products at different prices to risks with different underwriting ahcracteristics

Question 16

Tier placement

Answer 16

Companies may establish rating “tiers” in jurisdiction that permit companies to charge different rates within a single company to risks with different underwriting characteristics.

Question 17

Schedule rating credits/debits

Answer 17

Commercial lines products often use schedule rating to vary premium from the manual rates. involve the application of credits and debits for the presence or absence of characteristics.