Premiums for insurance policies are based on the risk presented and assessing the probability of that risk materialising.
Underwriters use all available tools and data to assist with this complex assessment to arrive at a premium.
The tools used for this risk assessment include government and industry statistics, claims and underwriting experience.
The process of ‘accumulation’ is also utilised by underwriters in the risk assessment. This means that one insurance provider will limit the number of properties it will insure within the same area.