Insurance pricing based on the perceived risk of the insured is referring to actuarially fairly priced insurance.

Question

Quizplus · Accepted Answer

Actuarially fairly priced insurance takes into consideration the risk of the insured and prices the insurance accordingly. This is done to ensure that those who pose a higher risk to the insurer pay a higher premium, while those who pose a lower risk pay a lower premium. This helps to ensure that the costs of claims are spread appropriately among policyholders.

Insurance Pricing Based on the Perceived Risk of the Insured