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🧠 '''Judgement rating (also judgment rating)''' is an [[Definition:Underwriting | underwriting]] approach in which the [[Definition:Premium | premium]] for an [[Definition:Insurance policy | insurance policy]] is determined primarily by an [[Definition:Underwriter | underwriter's]] professional expertise, experience, and qualitative assessment rather than by rigid [[Definition:Rating algorithm | rating algorithms]] or [[Definition:Actuarial model | actuarial models]]. This method predominates in [[Definition:Specialty insurance | specialty]] and [[Definition:Commercial insurance | commercial]] lines — such as [[Definition:Marine insurance | marine cargo]], [[Definition:Political risk insurance | political risk]], [[Definition:Kidnap and ransom (K&R) insurance | kidnap and ransom]], and bespoke [[Definition:Liability insurance | liability]] covers — where historical [[Definition:Loss data | loss data]] is sparse, [[Definition:Exposure | exposures]] are unique, and standardized rating tables cannot capture the nuances of a given [[Definition:Risk | risk]].

🔧 In practice, judgement rating draws on an underwriter's accumulated knowledge of a [[Definition:Class of business | class of business]], the specific characteristics of the risk being presented, market conditions, and the quality of the [[Definition:Insured | insured's]] risk management practices. An underwriter evaluating a one-of-a-kind construction project in Southeast Asia, for instance, will weigh factors such as the contractor's track record, local regulatory environment, geopolitical stability, and engineering complexity — inputs that no off-the-shelf [[Definition:Rating model | rating model]] fully captures. The [[Definition:Lloyd's | Lloyd's]] market, with its tradition of face-to-face negotiation and specialist [[Definition:Syndicate | syndicates]], has long relied heavily on judgement rating, though this exists alongside increasing use of [[Definition:Data analytics | data analytics]] tools that augment — rather than replace — the underwriter's discretion. Regulatory regimes differ in how much latitude they grant: some jurisdictions require [[Definition:Rate filing | rate filings]] that document the basis for premiums, while others afford underwriters broad discretion provided the rates are not unfairly discriminatory.

📊 The enduring relevance of judgement rating reflects a fundamental reality of insurance: not every risk can be quantified algorithmically. As [[Definition:Insurtech | insurtech]] innovation and [[Definition:Artificial intelligence (AI) | artificial intelligence]] expand the range of risks amenable to model-driven pricing, the domain of pure judgement rating narrows — but it does not disappear. Emerging risks such as [[Definition:Cyber insurance | cyber liability]], [[Definition:Climate risk | climate-related]] exposures, and novel [[Definition:Parametric insurance | parametric]] triggers often begin in the judgement-rated space before sufficient data accumulates for statistical pricing. The quality of an underwriting portfolio built on judgement rating hinges on institutional discipline: robust [[Definition:Peer review | peer review]], clear [[Definition:Underwriting guideline | underwriting guidelines]], and retrospective analysis of [[Definition:Loss ratio (L/R) | loss ratios]] are essential to prevent the approach from drifting into inconsistency or adverse selection.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Manual rating]]
* [[Definition:Experience rating]]
* [[Definition:Underwriting]]
* [[Definition:Risk assessment]]
* [[Definition:Specialty insurance]]
* [[Definition:Rate adequacy]]
{{Div col end}}

Definition:Judgement rating (also judgment rating) - Revision history

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