How Can I Work Out a Property Insurance Estimate?

There are three ways to calculate insurance premiums: observation, classification, and increase or decrease. It usually consists of two parts: pure premiums and additional premiums. Additional insurance premiums refer to various business expenses, commission expenses, estimated profits, and security fees. The additional insurance premium is added to the pure insurance premium and paid by the insurance subscriber, which is called the total insurance premium.

Calculation of insurance premiums

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Chinese name: Calculation of insurance premiums
Category: Related

Calculation: Observation, classification, increase and decrease insurance premiums
Related: Surcharge

The insurance premium usually consists of two parts: pure insurance premium and additional insurance premium. Surcharges refer to various business expenses,

1. Observation method, which is based on the knowledge of past experience and current and future development trends of the billing personnel to estimate the possibility of the greatest loss, and the probability of partial loss or total loss, based on intuitive judgment. Decided rates.

Features are flexible and best characterize individual dangers

Only marine insurance and most inland transportation insurance business. Some new businesses that lack sufficient statistics are also being used.

2. Taxonomy

That is, hazards of the same nature are classified separately, and the same insurance rate is levied on each dangerous unit of the same classification.

Widely adopted

Characteristics. In the classification, attention should be paid to whether the nature of the dangers of all units in each category are the same; and whether the loss experience is consistent over a suitable period of time.

3, increase and decrease

That is, in the same classification, the insured is subject to variable rates. The changes are based on actual loss experience that is dangerous during the insurance period, or based on their expected loss experience, or both.

The rate of increase and decrease in the classification method may increase, but it may also decrease, mainly in the adjustment of individual rates.

According to the past data, the probability of loss caused by certain dangers obtained through statistics is the basis for calculating the insurance rate.

1. Hazard determination

The so-called danger magnitude is the probability of a certain loss occurring and the possibility of its consequences within a certain time unit. An estimate of this probability is a risk determination.

Dangerous determination usually involves grouping the objects of insurance into the same dangerous group, and then the loss probability of the group is applied to individual occasions.

2. Hazard classification

Before calculating the insurance rate, the danger must be classified, and then statistics should be made based on the actual experience of each classification.

3. Structure of insurance rates

1) Structure of pure insurance rates

As for the structure of pure insurance rates, life insurance (fixed insurance) and property insurance (unfixed insurance) are inconsistent. The probability of loss in the life insurance premium rate refers only to the frequency of losses; while the probability of loss in property insurance, in addition to the frequency of losses, is related to the amount of losses.

Loss frequency = number of claims / number of insurance units

Loss Amount = Total Loss / Number of Claims

Therefore: pure insurance rate of life insurance = loss frequency = number of claims / number of insurance units

Pure insurance rate of property insurance = loss frequency × loss limit = total loss / number of insurance units

Total loss, including compensation and claims.

2) Structure of premium rate

It mainly includes commissions, business expenses, safety fees, profits and reserves.