Rating Composition

A rate for a risk ideally should reflect the hazards and exposures that the risk presents. Similarly the broader the coverage the higher the rate should be.


A rate is made up of:


Ø       Pure Risk element (ie expected ‘working loss’ claims)


Ø       Treaty reinsurance cost for Per Risk exposure (needed for the occasional high severity loss)


Ø       Catastrophe reinsurance cost.


Ø       Overheads (ie administration and charges).


Ø       Intermediaries’ commission.


Ø       Expected Profit.



Summarized from many sources


Any questions or comments please feel free to give me a call


IMAM MUSJAB – 08128079130




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