Page 96 - Misc Ebook IC 78

The Insurance Times

Q1.C) What is the prime factor for classification of
personal accident insurance risks, for the
purpose of rating and why the same has been
selected?

Ans. The basic principle of fixing the rates of premium in any
class of insurance is based on the degree of hazards
involved. Similarly in personal accident insurance the
main factor used for rating is based on the occupation
of the insured.

Generally speaking exposure to risks at home or street
is more or less similar for all persons, however the risks
associated with the professional occupation vary
according to the nature of work performed. For example,
an officer is less exposed to risks at work than a civil
engineer working at the site of construction.

But, since it is not practicable to fix the rate separate
plea for each profession or occupation, the occupations
are classified into groups. Each group reflect more or
less similar risk exposure. The system of classification
is simple and workable in practice.

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