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Q2. What are the attributes of good individual
risk rating system?

Ans. There are several attributes of good individual risk
rating systems. They are :
(i) Serve the needs of the organization using them.
(ii) Appropriately balance risk sharing and risk bearing.
(iii) Are not subject to internal or external manipulation.
(iv) Are simple to administer.
(v) Are easy to understand and
(vi) Do not subject the affected entities to large
fluctuations in costs from one year to the next due
to unusual or catastrophic experience.

Practical considerations might result in overlapping of
some attributes.

Q3. Discuss the types of individual risk rating
system.

Ans. There are two basic types of individual risk rating
systems, Prospective and Retrospective. Prospective
systems use past experience to determine costs for the

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