What is the purpose of a tabular rating in insurance?

A tabular rating is primarily used to assess surcharges for impairments. This system categorizes the risk associated with particular health conditions or lifestyle factors, allowing insurers to adjust premium rates accordingly. When an applicant has specific impairments or health risks that are deemed higher than average, the tabular rating helps to quantify that risk. It provides a systematic way for underwriters to apply charges based on known statistical data regarding morbidity and mortality associated with those conditions.

By utilizing a tabular rating guide, insurers can ensure that they are charging appropriate premiums that reflect the level of risk involved in insuring an applicant. This is essential for maintaining the financial stability of the insurance pool and ensuring that solvent rates are established for those who may pose higher risks due to health conditions or other factors. Thus, tabular ratings serve as an integral part of the underwriting process, helping to ensure that premiums are reflective of individual risk profiles.