American Property Casualty Insurance Association

Risk-Based Pricing

Risk-based pricing helps keep rates fair by matching rates to risks. 

For decades, insurers have used a wide variety of objective data—including education and occupation, among others—to help determine risk in order to keep insurance as affordable, competitive, and available for consumers as possible. This approach is the fairest way to match insurance costs to risks, so no one is paying more for insurance than they should.

Risk-based pricing benefits consumers by ensuring:

  • Fairer, lower, and more accurate rates
  • More choices and options in the insurance market
  • The less-risky do not have to subsidize the riskier

Risk-based pricing factors leverage proven science to ensure fairness and competitive pricing for consumers. As APCIA continues to fight to protect the risk-based pricing model to maintain a highly competitive, innovative insurance market, we are also working to explore additional avenues for advancing social equity and financial empowerment for consumers, businesses, and communities nationwide.