Rate Making

(redirected from Rating Clause)

Rate Making

In insurance, the process of determining premiums for large groups of policyholders. In rate making, the insurer must make certain that the premium is practical (that is, it covers actual risk of loss), fair to the policyholders, and non-discriminatory. Rate making is done for groups of policyholders because it is not cost effective to individually determine premiums for every policyholder.