[[Actuarial Notes Wiki|Wiki]] / [[Exam 5 (CAS)]] / **Deductible Rating** ## Definition ==Deductible Rating== is the process of determining rate credits or debits for different deductible levels, reflecting the reduced insurer costs when policyholders retain more risk. ## Methodology ``` Deductible Credit = 1 - (Net Expected Losses / Gross Expected Losses) Where: Net = Losses after deductible Gross = Losses before deductible ``` ## Considerations - Loss frequency - Loss severity distribution - Administrative costs - Moral hazard ## Related Concepts - [[Classification Ratemaking#Definition]] ## References - Werner & Modlin, Chapter 11