Every policy needs a price. Rating is the process of determining the premium for an insurance policy by applying rates, exposure information, and individual risk modifications according to the insurer’s rating plan and underwriting rules.

The process begins with classification of the risk, selection of the appropriate rate, multiplication by exposure units, and application of credits, debits, or package modifications. Automated rating engines handle high-volume personal and small-commercial lines; complex risks may require manual rating and underwriter judgment.

Accurate rating depends on correct data from the application and correct implementation of the rating algorithm. Errors produce under- or over-charges and can create compliance issues. Periodic rate reviews keep the rating plan aligned with emerging loss experience and expense levels.

• Process of calculating the policy premium
• Applies rates, exposures, and modifications
• May be automated or manual
• Requires accurate data and current rate plans