Category: Pricing & rating · Reviewed by Jake Leat, Associate Director · Last reviewed
Insurance pricing
Insurance pricing is the discipline of determining the premium that should be charged for an insurance risk. It draws on statistical modelling, economics, market behaviour and regulatory constraint, and is the single most important commercial lever in a (re)insurer’s profitability.
The technical premium
Most carriers maintain a technical price — the actuarial estimate of the premium needed to cover expected losses, expenses, capital cost and target profit. The technical price is then adjusted by an underwriter for:
Specialty / Lloyd’s lines rely heavily on individual underwriter judgement supported by reference data.
Regulatory context
FCA pricing rules (PS21/5) — in personal lines, prohibits new-customer prices being lower than equivalent renewal prices (“loyalty penalty” ban) effective 1 January 2022.
Solvency II technical provisions framework underpins capital cost in the technical price.
Consumer Duty (PRIN 2A) — fair-value and price-and-value outcomes apply to retail.
References
FCA Policy Statement PS21/5 — General insurance pricing practices.
Our service promise. We acknowledge every quote request the same working day. For straightforward risks, indicative terms typically follow within five working days. Complex risks — higher-risk buildings, cladding, mid-term proposals requiring fresh underwriting — may take longer; we’ll send you a progress note by the end of the fifth working day in those cases.