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

imusjab@qbe.co.id