How is 'market rating' different from 'insurance rating'?

Market rating is distinct from insurance rating in that it emphasizes a competitive pricing strategy, while insurance rating focuses on determining premiums based on thorough risk analysis. Market rating is often influenced by overall market conditions and competitor prices, aiming to attract customers through pricing that may be lower than the calculated risk would suggest. Conversely, insurance rating utilizes actuarial data to assess the specific risks associated with insuring a particular vehicle or driver, thus determining premiums that reflect the likelihood of claims being made.

This approach ensures that premiums adequately cover the anticipated costs of insuring policyholders based on their risk profiles. By highlighting this difference, it becomes clear that market rating and insurance rating serve different purposes in the context of motor insurance products.