Risk-based pricing

{
  "id": "MLC-T-INS-002996",
  "term": "Risk-based pricing",
  "field": "Insurance and risk management",
  "definition": "The practice of setting insurance premium rates based on the specific risk characteristics of an individual policyholder or group. Insurers use data analytics and actuarial models to assess the probability and potential severity of a loss for a given applicant, charging higher premiums for those with higher risk profiles. For example, in auto insurance, factors like driving record, age, vehicle type, and geographic location are used to determine the final price of the policy.",
  "url": "https://mlchart.com/terminology/insurance/risk-based-pricing/"
}