Actuarial Rate

AAA

DEFINITION of 'Actuarial Rate'

Actuarial rate is an estimate of the expected value of future loss. Usually, the future loss experience is predicted on the basis of historical loss experience and the consideration of the risk involved. Accurate actuarial rates help protect insurance companies against the risk of severe underwriting losses that could lead to insolvency.

INVESTOPEDIA EXPLAINS 'Actuarial Rate'

Generally, during the rate review, it is first determined whether the actuarial rates need to be adjusted. A projected loss experience gives the insurance companies the ability to determine the minimum premium required to cover expected losses.

RELATED TERMS
  1. Actuarial Valuation

    An actuarial valuation is a type of appraisal which requires ...
  2. Actuary

    A professional statistician working for an insurance company. ...
  3. Personal Finance

    All financial decisions and activities of an individual, this ...
  4. Prime Rate

    The interest rate that commercial banks charge their most credit-worthy ...
  5. Actuarial Analysis

    The examination of risk by a highly educated and certified professional ...
  6. Actuarial Risk

    The risk that the assumptions that actuaries implement into a ...
Related Articles
  1. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  2. Insure Your Future With A Career As ...
    Home & Auto

    Insure Your Future With A Career As ...

  3. Long-Term Care Insurance: Who Needs ...
    Home & Auto

    Long-Term Care Insurance: Who Needs ...

  4. Life Insurance: Putting A Price On Peace ...
    Insurance

    Life Insurance: Putting A Price On Peace ...

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center