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

 

 

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