What is the focus of individual rating in personal lines of insurance?

In personal lines of insurance, individual rating centers on the actual risk represented by a person's past claims. This approach involves analyzing specific data related to an individual's claims history, such as frequency and severity of past claims, to assess the risk they present to the insurer. By focusing on historical claims, insurers can better tailor premiums and coverage to an individual's unique circumstances.

This method allows for a more precise evaluation of risk as it considers the direct claims experience of the applicant, thereby providing a fairer and more personalized premium calculation. It contrasts with broader approaches that might consider general characteristics of a class of insureds or averages, which may not accurately reflect the specific risk associated with an individual policyholder.