Class rate is a pricing approach that sets premiums for a set of homogeneous risks in the same class.
Why class rates exist
Not every risk can be priced individually. Class rates provide operational speed and statistical stability where exposure and loss history are similar across a segment.
Claims and experience base
Loss experience within a class feeds future adjustments. If a class shows persistent adverse claims, the insurer may:
- increase base rates,
- add class modifiers,
- or tighten class eligibility rules.
Scenario
Two auto fleets have the same vehicle type and usage profile. They are assigned the same class rate, while a different class (heavy duty and high-risk routes) receives a higher class multiplier.