Can you kindly help me understand this on page 22: The large loading to pay for the guarantees means that reviewable IP rates can look very attractive to prospective policyholders.” I thought large loading would cause the premium rates to be less attractive to policyholders.
Hi Kimiko We are comparing a policy with guaranteed premiums with a policy with reviewable premiums. The policy with guaranteed premiums will have a large loading to cover the risk as premiums can't be increased if experience is poor. So as you say, the large loading will make these guaranteed premium policies less attractive. As a result, the reviewable policy will have attractive premium rates by comparison (which is what we've said in the text). Best wishes Mark
