This long-forgotten term “Perse Rating” again is being heard. Not sure whether some insurers are using it to bring premium differentiation?

It was later part of the twentieth century-there used to be a huge book which described all the rules to rate different occupancies. It was supplemented with Building regulations book, electrical regulations, fire protection manual, etc.

For example, if in a pharma company, there were various blocks like Bulk drug process block, formulation block, boiler house, captive power plant, QC lab, Office building, RM warehouse, FG warehouse, etc; then each of these blocks were given separate sum insured and were rated on their own merits. For example, boiler house and office had a much lower rate whereas the bulk drug process block had a higher rate.

The key aspect that was looked at was these blocks had to be “non-communicating”. Clear rules were defined, there used to be approved list of manufacturers of fire-proof doors and windows.

Come the later part of the last decade of the twentieth century, a gentleman came as secretary of TAC. He felt that engineers complicated this process of rating too much and ordered creation of a small tariff book which could be carried in the pocket. That ended perse rating. Came in the “One risk-one rate”.

Now, with GIC circular on minimum rates, and I am assuming the circular is silent on whether perse rating can be applied, some insurers, may be applying the perse rates. Of course, without any rules related to non-communicating blocks to be followed. If a RM godown has higher rate, apply the rate of the process block. But if boiler house has lower rate, apply the boiler house rate. Best of both worlds.

Friends in the market can correct me if no such perse rating is being followed. This blog is based on a hunch – since many people have been asking me as to what the meaning of perse rating is.