Rating & pricing
How the premium is actually computed — and where the schedule-rating credit (the cleanest Glacis hook) lives. All STABLE.
The fundamental equation
Section titled “The fundamental equation”Premium = Rate × Exposure units
- The rate is the price per unit of exposure.
- Exposure units measure the amount of risk (per $1,000 of property value, per $100 of payroll for workers comp, per vehicle, per employee, etc.).
The rating methods (know all five)
Section titled “The rating methods (know all five)”| Method | How it sets price | Best for |
|---|---|---|
| Manual / class rating | Look up the rate in a published table by class. | Large, homogeneous groups (auto, homeowners). |
| Experience rating | Adjust the manual rate up/down by the insured’s own past loss history. | Mid/large commercial accounts (e.g., the workers-comp experience mod). |
| Schedule rating | Apply debits and credits for specific risk characteristics of this account. | Commercial risks with notable individual features. |
| Retrospective rating | Final premium trues up to actual losses during the period (within a min/max). | Large accounts willing to share risk. |
| Judgment rating | Underwriter prices from expertise when there’s no credible loss data. | Novel/unique risks — e.g., emerging AI exposure. |
Schedule rating = the Glacis control hook
Section titled “Schedule rating = the Glacis control hook”Schedule rating lets the underwriter apply credits (discounts) or debits (surcharges) for specific, identifiable characteristics of an individual risk — better management, safety programs, loss-control measures, etc. STABLE
This is the cleanest single bridge from “Glacis software” to “lower premium for the customer / better book for the MGA”:
The customer gets a lower price for a real reason; the MGA gets a better-selected, lower-loss book. Both sides win because the credit reflects genuinely reduced risk.
Judgment rating = the right tool for a novel AI risk
Section titled “Judgment rating = the right tool for a novel AI risk”Because AI/healthcare Tech E&O has no credible loss history, early pricing leans on judgment rating (and the E&S market, which permits freedom of rate/form). Over time, as the book generates loss data, pricing can shift toward experience/class rating — and Glacis’s accumulated telemetry makes that data richer. See 01 The flywheel.
Rate regulation (concept; specifics VERIFY)
Section titled “Rate regulation (concept; specifics VERIFY)”Admitted carriers must generally file rates with the regulator, which polices that rates are not inadequate, not excessive, and not unfairly discriminatory. E&S (non-admitted) carriers enjoy freedom of rate and form (one reason novel risk goes there). STABLE
→ 03 Loss ratio & combined ratio
Drill this page →13 bank questions stand behind what you just read. Check it while it’s warm.