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Q1. Discuss methods of setting premium rates in insurance companies (Manual rating, merit
rating, judgement rating)
According to Billman et al. (2020), insurance pricing is the concept used by insurance
companies to determine the rate premium charged on specific covers. Many insurance companies use
the following method to determine their premium: merit rating, judgment rating, and manual rating.
These standard methods are described as follows:
Manual rating- under this method, the insurance company determines its insurance premium
based on specific units of covers (Billman et al., 2020). The insurance firms establish their premiums
by utilizing the average claim data from number numbers of categories. Further, a considerable
number is then adjusted to resemble particular insurance groups created to differentiate specific
Judgment rating- under these approaches, premium rates are established by conducting an
evaluation separately for each acquaintance. Several insurance companies utilize the knowledge of
underwriters to determine premiums. The underwrite...
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