Calculated Result
This result appears above the form after submission, exactly as requested.
| Metric | Value |
|---|---|
| Awaiting input | Submit the form below. |
Premium Bridge Chart
Interactive Plotly visualizationGross Premium Input Form
Use the grid below. It shows three columns on large screens, two on smaller screens, and one on mobile.
Formula Used
1. Claim Frequency = Claims Count ÷ Exposure Units
2. Trended Severity = Average Severity × (1 + Claim Trend %)
3. Indicated Pure Premium = Claim Frequency × Trended Severity
4. Credibility-Adjusted Pure Premium = Z × Indicated Pure Premium + (1 − Z) × Benchmark Pure Premium
5. Fixed Cost Block = LAE + Acquisition + Maintenance + Reinsurance
6. Variable Loading Ratio = Commission % + Variable Expense % + Premium Tax % + Profit % + Contingency % − Investment Credit %
7. Gross Premium Before Policy Fee = (Credibility-Adjusted Pure Premium + Fixed Cost Block) ÷ (1 − Variable Loading Ratio)
8. Final Gross Premium = Gross Premium Before Policy Fee + Policy Fee
This method blends statistical experience with a benchmark, then adds fixed and variable loadings. It works well for pricing reviews, sensitivity checks, and preliminary ratemaking discussions.
How to Use This Calculator
- Enter exposure units and observed claims.
- Provide average severity and a trend percentage.
- Set a credibility weight and benchmark pure premium.
- Fill in fixed costs like LAE, acquisition, and maintenance.
- Enter variable loadings such as commission, tax, and profit.
- Add any investment credit and flat policy fee.
- Press the calculate button to show the result above the form.
- Review the table, chart, and exports for reporting.
Example Data Table
These examples show how different segments can produce different gross premium indications.
| Segment | Exposure | Claims | Avg Severity | Trend % | Credibility % | Adjusted Pure | Gross Premium / Policy | Portfolio Premium |
|---|---|---|---|---|---|---|---|---|
| Standard Personal Auto | 1,000 | 72 | $1,850.00 | 6.00% | 85.00% | $141.01 | $290.40 | $290,396.22 |
| Small Business Liability | 400 | 20 | $4,200.00 | 8.00% | 78.00% | $227.50 | $504.79 | $201,915.36 |
| Property Cat Layer | 150 | 6 | $18,500.00 | 10.00% | 70.00% | $755.80 | $1,515.85 | $227,376.92 |
Frequently Asked Questions
1. What is gross premium?
Gross premium is the final charged amount after adding expenses, taxes, profit loadings, and any fees to expected losses or pure premium.
2. Why is credibility included?
Credibility balances your own experience with a benchmark. It is useful when observed data is limited, unstable, or not fully mature.
3. What does benchmark pure premium mean?
It is a reference loss cost from market data, manual rates, or historical indications. The calculator blends it with observed results.
4. Why are some inputs fixed and others percentages?
Some expenses happen as flat amounts per policy. Others rise with premium volume, so they are modeled as ratios.
5. What happens if the load ratio is too high?
If total variable loadings reach or exceed 100%, the denominator breaks down. The tool will show an error because a valid premium cannot be derived.
6. Can I use this for rate comparisons?
Yes. Change assumptions one at a time and compare results. It helps when reviewing margin, expense pressure, or loss trend sensitivity.
7. Is the chart suitable for presentations?
Yes. The Plotly premium bridge makes it easier to explain how losses, fixed costs, loadings, and fees build the final premium.
8. What should I export with the report?
Export the summary table, chart interpretation, and assumptions. That makes the pricing result easier to audit and share with stakeholders.