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Glossary


A rated insurer is an insurance company that has received a financial size and strength rating from a rating agency such as A.M. Best and Standard and Poor's.

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A rated policy is a life insurance policy that is issued at a premium rate higher than standard to cover an individual classified as a substandard risk.

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Rate discrimination involves an insurer using different rates for exposures of the same risk type and classification.

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Rate making refers to the process of using underwriting information to calculate a premium for the exposure.

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A rate manual contains classifications and rates for a given line of insurance.

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The rate of natural change is birth rate minus death rate.

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Rate on line (ROL) is the calculation in percent derived by dividing reinsurance premium by reinsurance limit; the inverse is known as the payback or amortization period. For example, a $10 million catastrophe cover with a premium of $2 million would have an ROL of 20 percent and a payback period of 5 years.

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Rating means determining the amount of premium to be paid to insure or reinsure a risk.

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A rating bureau is an organization that collects statistical data (such as premiums, exposure units, and losses), computes advisory rating information, develops standard policy forms, and files information with regulators on behalf of insurance companies that purchase its services.

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The rating class is the classification for rating purposes of an individual exposure.

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