Author: Jerrison Li, Associate Director - Product Management, Moody's
The term ‘premium’ is often used as a singular concept to represent the price an insured pays for coverage. However, for underwriting professionals navigating the complex world of commercial property insurance, this single price is the culmination of a multifaceted and strategically vital process.
What lies behind this singular figure—the final premium—is the result of three cascading, distinct, and sequentially derived values: the technical premium, the corporate premium, and the offered premium.
As an underwriter, being able to view these three premium figures separately or together transforms the pricing process from a simple calculation into a strategic analysis. It enables the underwriter to instantly assess profitability, justify their decisions, and align their actions with the company's broader financial objectives. Let’s define the three premium values in more detail:
- The technical premium is the actuarially pure, data-driven calculation of the true cost of risk, encompassing expected losses, expenses, and a required margin for profit and contingencies. It is the financial bedrock of an insurance product.
- The corporate premium, often known as the manual or filed rate, operationalizes this technical cost together with competitive factors into a standardized, compliant, and systematic rating structure that serves as the underwriter's starting point.
- Finally, the offered premium is the market-facing price, determined by the underwriter who applies individual risk analysis, judgment, and competitive awareness to the corporate rate in the form of debits or credits in a process known as schedule rating.
Enhancing efficiency and precision with UnderwriteIQ’s new pricing service
Since its launch in 2022, Moody’s UnderwriteIQ™ has enabled account and Excess and Surplus (E&S) underwriters to enhance their risk selection processes, driving greater efficiency and precision by harnessing Moody’s RMS industry-leading catastrophe modeling solutions and advanced cloud-native technology.
We’re excited to announce that UnderwriteIQ users can now leverage a new pricing service to quickly determine an account's price adequacy using Moody’s RMS catastrophe loss model output.
Figure 1: Flexible and customizable pricing formulas in UnderwriteIQ
With UnderwriteIQ, users can avoid exporting modeling outputs and manually feed them into a pricing engine—risk can now be priced seamlessly using multiple frameworks, including the technical premium, corporate premium, and offered premium, all within the platform.
UnderwriteIQ enables users to define premiums, capital, and other custom measures using loss outputs based on risk measures—such as metrics like the mean or standard deviation, financial perspectives like gross or ground-up loss, and, when applicable, return periods.
This streamlined and highly intuitive pricing experience allows underwriting teams to perform calculations and adjustments directly within the platform, accounting for costs like loss adjustment expenses (LAE), acquisition costs, administrative overhead, and risk margins, all while addressing the unique challenges of pricing complex risks with precision and efficiency.
Enhancing the account underwriting workflow
Earlier in 2025, we introduced Workflow Builder for UnderwriteIQ, a workflow-building visual interface to help our clients enhance their underwriting workflows when account underwriting multiple locations across different geographies and different risk profiles.
We are now incorporating these new pricing capabilities into Workflow Builder to enhance flexibility and provide a comprehensive view:
- At the analysis level, users can enable pricing by selecting the pricing field in the model profile during setup.
- Alternatively, pricing can be conducted at the account level by grouping multiple analyses and requesting pricing for the combined group.
- This functionality enables pricing details to be viewed across peril/region as well as at the account level, ensuring a detailed, tailored understanding of costs.
Within the new pricing experience, users can select a formula to calculate technical pricing and corporate pricing or manually input a premium for an offered pricing view.
Additionally, users can include an attritional loss ratio in pricing views, allowing non-catastrophic losses to be factored in, better reflecting the overall risk profile.
This approach ensures that a pricing strategy is both versatile and aligned with the complexities of risk management.
Figure 2: Choosing model profiles in Workflow Builder
Figure 3: Selecting pricing formulas in Workflow Builder
New UnderwriteIQ Pricing Report
Once a workflow is complete, users can review pricing calculation results in a new pricing section within the UIQ report. This section provides a detailed breakdown of each pricing view, including the premium, capital, key pricing metrics such as the combined ratio, as well as risk measures and custom metrics defined in a pricing formula.
The report is available at both the analysis level and account level, allowing users to seamlessly switch between views using the analyses dropdown located in the top-right corner. This streamlined approach ensures easy access to comprehensive pricing insights across different levels of granularity.
Recalculate feature
Pricing is dynamic and fast-moving. That’s why we have built a recalculate feature (see figure above) that quickly allows users to preview what the pricing metrics would look like if the technical or corporate formula, attritional loss ratio, or offered premium were changed.
Actionable data at your fingertips with Risk Data Lake
As pricing workflows become more efficient and automated, and as market pressure increases, organizations must rely on underwriters’ expertise to gain an advantage. With Risk Data Lake (see figure below), you can empower your underwriters by creating flexible reports with the exposure and claims information they need during schedule rating.
Determine price adequacy at the point of underwriting
This is just one way UnderwriteIQ helps underwriters leverage Moody’s RMS state-of-the-art catastrophe loss models to get insights at the point of underwriting.
To learn more about how UnderwriteIQ can help you streamline the account underwriting workflow with increased speed and confidence, please get in touch.
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