What is the term for the pricing of insurance?

What is the term for the pricing of insurance?

• A. Ratemaking
• B. Premium policy
• C. Actuarial pricing
• D. Risk scoring

Answer: (A)

Pricing insurance means establishing the rate at which premiums are charged to cover expected losses, expenses, and profit. The standard term for this process is ratemaking. It’s the actuarial work that translates risk experience and exposure into a price, taking into account factors like loss history, exposure units, expenses, and required profit margins. Actuarial pricing describes the methods used, but the overall process of setting those rates is called ratemaking. The term premium policy isn’t a recognized phrase for pricing, and risk scoring relates to assessing risk for underwriting rather than setting the price.

Pricing insurance means establishing the rate at which premiums are charged to cover expected losses, expenses, and profit. The standard term for this process is ratemaking. It’s the actuarial work that translates risk experience and exposure into a price, taking into account factors like loss history, exposure units, expenses, and required profit margins. Actuarial pricing describes the methods used, but the overall process of setting those rates is called ratemaking.

The term premium policy isn’t a recognized phrase for pricing, and risk scoring relates to assessing risk for underwriting rather than setting the price.