The process whereby an insurer (insurance company) determines premium rates in a level adequate to cover and account for expected losses as estimated for a given risk. Premium rates are established in proportions reasonable for and unbiased against the risk being covered. Rate making is all about establishing a fair premium to be charged on insureds, taking into consideration all relevant load factors.

Rate making, also known as insurance pricing, aims to ensure insurance companies are able to set fair and adequate premiums for both the insured and the insurer given broader market competition. Adequacy of rate implies that premiums must be in a proportion adequate to maintain insurer solvency and ability to stay in business.