Underwriting Terms
What is Experience Rating?
Modification factor based on loss experience • Increases or decreases the premium • Usually a three-year period
What is Judgement Rating?
No set rates, based upon underwriter's experience
What is an Application?
A primary source of underwriting information
What is Underwriting?
A process of evaluating a risk
What is a Loss Ratio?
It compares the company's operations year over year
What is the Loss Ratio Equation?
Incurred Losses / Earned Premiums = Loss Ratio
What is a Expense Ratio?
It's the cost of doing business
What are the Three Types of Rates in Underwriting?
Judgement, Manual (class), and Experience
What is Combined Ratio
Loss Ratio + Expense Ratio = Combined Ratio
What is Manual (class) Rating?
Set rates for specific risk classes
What is a Binder?
Temporary Insurance Usually given by the agent - verbal or in writing. Automatically ends if a policy is issued by the underwriter.
What is the Expense Ratio Equation?
Underwriting Expenses / Written Premium = Expense Ratio
