Insurance rate

The cost of the services of the insurance fund is a premium (payment) paid by the client (policyholder). In fact, the client pays a certain amount for the company’s work in case of an accident.

In all these organizations insurance premiums are calculated. Let’s take a closer look at what it is.

Premium size

This should be sufficient for: Cover expected claims during the policy period. Create reserves. Cover the costs of the insurance company. Provide a business with a certain profit. The upper limit of the cost of insurance services is determined by two factors: its level of demand and the size of the discount rate applied to deposits. In addition, the amount of the premium is affected by: The structure and size of the insurance portfolio. It represents the total amount of risk. Management fee. There are 2 ways to determine insurance rate is legislative and independent methods. The first is used for mandatory types of insurance, the second – for voluntary insurance. From insurance rate calculated by the organization depends largely on its financial stability.

Net rate

It is part of the rate to create an insurance reserve, which, in turn, is used for subsequent payments under the contract. Two elements of this part are distinguished.Insurance rate is risk rate and premium. At the expense of the former, reserves are built up, from which payments are made later in the event of an accident. The risk rate is considered the basis of the tariff.

The risk premium is linked to the constitution of a reserve fund in case the number of accidents exceeds the number foreseen. If the policy provides for several different insured events, the calculation is made separately for each risk.

Types of insurance

They are divided by the method of constitution of the fund and the calculation of the insurance rate. The main types are:

  • Risk insurance. This includes business other than life insurance where the insurer is not obliged to pay the insured amount at the end of the contract period. They are not associated with the accumulation of the amount during the term of the agreement.
  • Endowment insurance. In this case, payments are provided in the event that the insured entity survived to the end of the contract period and when it died during that period. In determining the amount of the contribution in the latter case, the accumulated component is included in the net rate. At the expense of the latter, there is an accumulation of the amount that will be paid at the end of the insurance period.


In this insurance rate a part includes the costs of: Conducting insurance business. Creation of a fund of preventive measures. Profit of the insurer from the operation performed.

Related Posts

Personal finance tips

Personal Finance Tips That Will Save You Money

If you’re looking to save money, check out these personal finance tips. From budgeting to investing, these tips will help you keep more of your hard-earned cash….

A Minimalist Approach to Personal Finance

For most of my life, I wasn’t very good with money I made it and I spent it. The money came in and out and since nearly…

Auto Insurance in Philadelphia PA – What You Need to Know in 2022

A necessary expense for all drivers in Philadelphia PA is auto insurance. There are a few things you should know about auto insurance in Philadelphia PA, before…

5 Ways to Find the Best Auto Insurance in Conroe TX

When it comes to finding the best auto insurance in Conroe TX, there are a few things you need to keep in mind. Shopping around for the…

Is a Car Insurance for Personal Injury Better Than Without? 2022 New and Updated

Most are aware that they need car insurance in order to drive, but many people are not aware that they may also need car insurance for personal…

6 Advantages of Automobile Club Inter-Insurance

If you’ve ever been in a car accident, you know how important it is to have insurance. But what are the advantages of having automobile club Inter-Insurance?…