- Are you aspiring to own an insurance organisation?
- Do you wish to know more about Insurance and premium?
- Has it come to you as a burden to know insurance premiums are been calculated?
- Have you ever thought about what is premium and how does getting the right premium help in elevating your insurance firm to another phase entirely?
Then it is my pleasure to announce to you that this article is for you because it will stand as an eye opener as to insurance and premiums and what they truly entails as to how the premiums is going to affect the claims as well as profits made by an insurance firm. Before further breaking downs are made, it is very important that clear information is been given out as regards how important premium is to an insurance firm. Research has shown that premiums are very important to any insurance firm because they to a very long extent determine the claim rate and if it is going to be successful making claims as well as the investment pool having known that insurance firm makes their profit or surplus value from the premium in which they invest in the investment pool.
Every insurance firm will have their different quotes on the different insurance premiums, which is very important to work with an independent agent who can properly compare different quotes from varieties of insurance companies and firms. Most insurance premiums evaluate their premiums during calculation uses the following:
- Age
- Medical History
- Life History
- Credit Score
It has also been discovered that some insurance firm make orders (hire) actuaries or statisticians to have a better and accurate idea of the number of premium a particular client should be charged hence they are not charged equally. For instance, the way an insurance firm will charge a person who always fall ill will not be the same way they will charge the one who is always healthy mostly when it has to do with the life and health insurance.
For the actuaries, they use mortality and sickness statistics to predict possible losses due to the rate of sickness or death. They use tables as indices to arrange or assign probability to age and gender to know the possibility of them falling sick regularly or dying regularly. They also proceed further in the creation of modalities of the person dying any time soon or getting sick from the data in which they collected from that person.
Determinants of Insurance Premiums
The process involved in determining the insurance premium are as follows;
- Investigating into familiar illnesses and diseases.
- Analysing reports such as the vehicles documents as well as medical records
- Predicting the likelihood of a client making a claim on their insurance coverage.
In conclusion there are several ways premiums are been calculated and the premium account due to thee procedures attached in it, it isn’t static as regards the amount.
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