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The Insurance Times

mandate the choices of the remaining players, the
optimal strategy often involves anticipating the choices
of others, negotiating the individual selection of
strategies, or randomly selecting a strategy to prevent
opponents from correctly anticipating one's own
selection.

51. One of the most persistent misconceptions associated
with property and liability insurance is the level of
accuracy which actuaries are believed to achieve in the
assessment of individual loss propensity.

Over the years, as the doctrine of caveat emptor has
been eroded and insurance risks have become
increasingly complex, rate manuals have evolved to
the point that, for many lines of insurance, they provide
the exact premium to be charged for providing a
specific coverage to a specific risk for a specific
period.

52. Exposure
The basic rating unit underlying an insurance premium
is called an exposure. The unit of exposure will vary
based upon the characteristics of the insurance coverage
involved.

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