Page 144 - Group Insurance and Retirement Benefit IC 83 E- Book

The net result of the experience rating process is usually called the contract holder

account balance, representing the final balance attributed to the individual contract
holder. As pointed out earlier this balance or a portion of the balance can be refunded to

the contract holder. The adequacy of the group's premium stabilization reserve influences
dividend or rate adjustment decisions.

Liability insurance is designed to protect an individual against the possibility that he will

be held responsible in a court of law for injury to another‘s person, property, or other

interests. The property owner is held responsible for accidents happening on his property
if negligence can be established or legal liability exists by statute. Similarly, the

contractor is held responsible for accidents that result from his operations, and the

manufacturer for accidents arising from the use of his product, while the professional
may even bc held liable for the advice he gives. The insurance for these diverse forms of

liability is provided by several lines of insurance which are generally grouped together
under the title ―Liability Other Than Automobile,‖ or ―General Liability Insurance.‖

Manuals of rules and rates for general liability insurance are published by the National
Bureau of Casualty Underwriters. by the Mutual Insurance Rating Bureau, and by several

independent insurance companies. These rules and rates arc also the basis of the liability

rates appearing in the multi-peril manuals published by the Multi-Line insurance Rating
Bureau and the various state fire rating bureaus.

The rating techniques used by the general liability underwriter are in some ways similar
to those used by fire underwriters despite their superficial antitheses. Both liability and

fire insurance premiums are determined by a complex process in which the rates are
influenced by the business of the insured occupying the premises and by risk

characteristics that modify the hazard (e.g., the existence of elevators); however. the

actuarial procedures used to establish the rates charged by the general liability under
writer are closely related to the other casualty lines rather than property insurance. The

determination of the overall rate level change closely resembles the procedure used for

automobile liability insurance, while the determination of class rates mixes techniques
borrowed from both automobile and workmen‘s compensation ratemaking with some

unique procedures. Unlike many other lines of insurance, there is no single general