The premium rating of commercial risks
The purpose of this paper is to provide accessible, comprehensive and action provoking material for general insurance actuaries. This should provide guidance on how to approach commercial insurance pricing and help to develop skills in this area. It is the intention of the Working Party to avoid duplication with previous work whether carried out on a broad basis or specific to individual classes of business, in particular relating to personal insurance and London market business. Additionally, other work will be taken for granted including general management issues such as capital and expenses allocation in order that the paper can focus on the particular issues surrounding this area of the business. The scope can be expressed in terms of the two dimensions of the size of the risks involved and the nature of the cover provided. Three broad groupings of policyholder size have been considered being small, medium and large which are closely correlated to the pricing approach adopted. The second dimension has been restricted to Liability, Property and Motor and the different issues which arise from these business areas have also been outlined in the appendices.