Rate / Tariff (Tarif)
A rate (tariff) is the set of premium rates and rating factors defined by an insurer for a line of business or product, used to calculate the premium for a specific risk.
Concept
A rate, or tariff, is the self-contained system of premium rates, rating factors, and terms defined by an insurer for a particular line of business or individual product, used to calculate the individual premium for a specific insured risk. The rate thus forms the bridge between actuarial risk calculation and the premium offered in the market and applied to an individual policy.
Rating Factors
A rate typically consists of several rating factors that individually or in combination influence the premium amount – for example, the regional rating class and the no-claims class in motor insurance, age and health status in life and health insurance, or the type of business and revenue in commercial liability insurance; the weighting of individual factors is derived from statistical analyses of historical loss experience.
Rate Generations and Book Management
Because rates evolve over time in response to changing risk insights, competitive conditions, and regulatory requirements, insurers typically maintain several parallel rate generations, with existing contracts generally remaining under the originally agreed rate while new business is calculated under the current rate; switching an existing contract to a new rate is often only possible under certain contractual conditions.