Rate making refers to the process of establishing the prices or rates that an insurance company charges its policyholders for various types of insurance coverage. This process is crucial for insurance companies because it directly affects their profitability, competitiveness in the market, and ability to manage risk. Key components involved in rate making include: 1. **Data Collection and Analysis**: Insurers gather historical data on claims, expenses, and other relevant factors that influence risk. This data is analyzed to identify trends and estimate future claims costs.
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