Overview of Rating in Guidewire

Rating
 What is rating?
Rating is the process of determining the cost of a policy.
 What is cost?

• A cost is a unit of price for an aspect

of a policy over a specific period of
time
• Examples of costs
 Premium for an entire coverage
 Taxes
• Total cost of policy is sum of individual
costs
Cost calculation

Base Rate • The base rate is rate for a

(Rate modified based on factors
such as increased limits,
deductibles, anti-lock brakes,
etc.)
particular coverable or coverage
as specified by a rate table
• The adjusted rate is the base rate
adjusted by coverage terms (such
as deductibles and limits)

Adjusted Rate
Example for cost calculation
• Base rate = $30
• Adjustment1 - Coverage limits selected are higher than those of the base rate
Factor = 1.93
• Adjustment2 - $1000 deductible selected (Base uses $500)
Factor = .85
• Base RateX Adjustment1 X Adjustment2 = Adjusted Rate
$30 X 1.93 X .85 = $49.22
Rating Engine

• Rating Engine will do the calculation of costs for a policy based on the inputs shared by
policy center.

• Rating Engine can be provided by Guidewire or third-party .

• Input: Details of the Basis and rating inputs (coverages, coverage terms and modifiers
defined in the product model)

• Output: Costs that represent the price for the various portion of the policies
Rating in Guidewire
• Guidewire rating management will use Rate Book for rating a policy.
• Rate Book consists of Rate tables and Rate Routines.
• Rate table will have the actual factor values for rating.
• Rate routine defines algorithm for calculating the rate for coverages, taxes, and other
costs on a policy
Rate Tables

Parameter values determine the factor value to be used in a rating

algorithm calculation.
Rate Routine
• A rate routine defines algorithm for calculating the rate for coverages, taxes, and
other costs on a policy
• Rate routine can have steps with:
• Mathematical operations, conditionals, and assignments that work on rate table
lookups
• Gosu function calls and policy data
• Rate routine steps are executed from top to bottom
• Steps are instructions that define rating algorithm
• Each instruction can be of one or more steps
Rate Routine Steps
• In the example above, the rows 6-11 is one instruction and row 13-19 is also one instruction.
• Each step has the following fields:
• Instruction – The target of an assignment operator, a conditional instruction, or the start of a
section comment. Blank for other operators.
• Operator (Op) – An assignment, arithmetic, or rounding operator.
• Opening parentheses (optional) – One or more opening parentheses to group a series of steps.
• Operand Select one of the following operand types:
 Properties on the cost
 Functions
 Parameters
 Rate tables
 Variables
 Conditional expressions
 Constants
• Closing parentheses (optional) – One or more closing parentheses to group a series of steps.
• Line comment– Optional description of the step. Use a section comment to provide comments
about the following or preceding rows. Use a blank step to improve readability. You can add a line
comment to a blank step.
Display of costs in a policy
• Costs are displayed in “Quote Screen” for a given policy
Costs Continuation…

 Costs can be divided into two primary types:

 Premium costs: Premiums are costs for items on the policy (such as the cost for a
coverage). For example, the Comprehensive and Collision coverage in the
screenshot above are examples of premium cost.
 Non-premium costs: Non-premium costs are costs that are charged to the policy
holder but are not charges for coverages. They are usually taxes or surcharges
(such as processing fees for a multi-installment payment plan) that directly apply
to the amount of premium charged. For example, the California tax for $95 in the
screenshot above is a non-premium cost.
 The summation of all the costs will be the total premium of a policy.
Total Premium = Premium costs + Non-Premium costs
Thank You