A blanket rate is a common premium rate framework used across a group of similar exposures, rather than pricing each policy or risk as an isolated item.
Why it is used
Underwriters use blanket rates where individual differences are minor and portfolio efficiency is more important than micro-segmentation. It is often used for group programs, commercial classes, and shared benefit structures.
Rate mechanics
The aggregate loss experience, frequency patterns, and aggregate claims volatility are used to calibrate a single rate factor. That improves consistency, but may overcharge some participants and undercharge others if exposures diverge over time.
Claims and margin
If the blanket rate is set too low, deterioration in claims emerges across the block and can trigger endorsements, rate filings, or nonrenewals for the next term. If too high, it may cause adverse selection as stronger risks exit.