Who is responsible for establishing rates for an insurer?

The establishment of rates for an insurer falls under the responsibility of an actuary. Actuaries use statistical analysis and mathematical models to assess risk and determine the appropriate premium rates that an insurer should charge to cover those risks adequately while also ensuring profitability. This involves evaluating data related to historical claims, potential future claims, and industry standards to forecast potential losses and financial viability. Actuaries play a crucial role in the insurance industry by balancing the need for competitive pricing with the necessity of maintaining sufficient reserves to pay claims.

In contrast, underwriters primarily focus on evaluating individual applications for insurance coverage, assessing risk levels, and determining whether or not to accept a particular risk based on established guidelines. Claims adjusters handle the assessment of claims and the process of ensuring that claims are paid out fairly according to policy coverage. Brokers facilitate the sale of insurance policies but do not set rates; instead, they work to find the best coverage options for their clients based on the rates established by the insurers.