Insurance Risk Calculator

Calculator Inputs

Age

Used in the age deviation component of the score.

Coverage Amount ($)

Higher coverage can increase premium pressure.

Annual Income ($)

Used to build a coverage-to-income ratio.

Annual Claim Probability (%)

Estimated chance of a claim in one year.

Average Claim Amount ($)

Expected average severity before the deductible.

Deductible ($)

Reduces the retained severity in this model.

Prior Claims

More prior claims push the risk score upward.

Exposure Units

Examples: insured items, drivers, or locations.

Risk Load (%)

Extra pricing for uncertainty and adverse deviation.

Expense Load (%)

Covers admin, servicing, and operating expense.

Profit Margin (%)

Target return built into the gross premium.

Confidence Margin (%)

Used here as a reserve and prudence buffer.

Formula Used

Expected Claim Count
Expected Claim Count = Exposure Units × (Claim Probability ÷ 100)

Retained Severity
Retained Severity = max(Average Claim Amount − Deductible, 0)

Expected Loss
Expected Loss = Expected Claim Count × Retained Severity

Technical Premium
Technical Premium = Expected Loss × (1 + Risk Load) × (1 + Confidence Margin)

Gross Premium
Gross Premium = Technical Premium ÷ (1 − Expense Load − Profit Margin)

Risk Score
Risk Score = Weighted average of normalized age, ratio, history, probability, severity, and exposure factors.

This calculator is an educational actuarial-style model. It helps compare scenarios, not replace underwriting judgment, policy wording, legal review, or carrier pricing manuals.

How to Use This Calculator

Enter the subject age, coverage amount, and annual income.
Estimate annual claim probability and average claim size.
Add the deductible and number of prior claims.
Set exposure units to reflect the insured scale.
Choose risk, expense, profit, and confidence margins.
Click the calculate button to show the summary above the form.
Review the table, chart, and pricing interpretation.
Export the result as CSV or PDF for sharing.

Example Data Table

Illustrative examples only. Values are rounded for easier reading.

Scenario	Coverage ($)	Claim Prob. (%)	Avg Claim ($)	Deductible ($)	Exposure	Gross Premium ($)	Risk Band
Lower volatility	150,000	4.50	9,000	1,000	1.00	760.00	Low
Balanced profile	250,000	8.00	18,000	1,500	1.40	3,020.00	Guarded
Higher pressure	400,000	14.00	32,000	2,000	2.10	10,480.00	Elevated

FAQs

1. What does the risk score represent?

It is a weighted indicator built from age deviation, coverage pressure, claim history, probability, claim severity, and exposure size. Higher scores suggest more underwriting stress.

2. Is this calculator suitable for real underwriting decisions?

It is best for education, scenario testing, and quick comparisons. Real underwriting also considers policy wording, legal rules, territory, fraud controls, and carrier-specific rating plans.

3. Why is deductible subtracted from average claim amount?

That creates retained severity, which estimates the portion still borne by the insurer. It is a simplification, but it makes scenario testing easier and more transparent.

4. What is the difference between technical premium and gross premium?

Technical premium adds risk and prudence margins to expected loss. Gross premium then adds expense and profit assumptions, making it closer to a commercial selling price.

5. How should I choose exposure units?

Use a unit that reflects scale, such as drivers, sites, assets, contracts, or insured items. Higher exposure usually increases the expected claim count.

6. What does break-even claim probability mean?

It estimates the claim probability where the pricing becomes roughly neutral under your selected assumptions. Above that point, the chosen premium may be too low.

7. Why does annual income matter here?

Income helps form a coverage-to-income ratio. That ratio can signal whether coverage size looks moderate or aggressive for the profile being evaluated.

8. Can I export the result for reporting?

Yes. After calculating, use the CSV button for spreadsheet work or the PDF button for a shareable summary with the result table and chart.