What rating system is utilized in property insurance underwriting when insureds have similar characteristics?

The class rating system is utilized in property insurance underwriting when insureds have similar characteristics because it allows insurers to group policyholders into classes based on shared traits such as the type of property, location, and risk factors. This approach streamlines the underwriting process by simplifying the evaluation of risks. When multiple insureds share similar characteristics, they can be charged similar premiums, thereby providing a more efficient and equitable way to assess risk and pricing across a segment of policyholders.

This method contrasts with individual rating, where premiums are determined on a case-by-case basis, often requiring individual assessments of risk that can be more time-consuming and expensive. Assessed and averaged ratings are not standard terms in the context of property insurance underwriting, making them less relevant in this situation. Therefore, class rating is the most appropriate system when dealing with groups that exhibit comparable risk characteristics.