When both Objective and Subjective are used in rating, the index producing which rating is used?

• A. Lower
• B. Higher
• C. Median
• D. Average

Answer: (B)

When rating a self‑insurance plan, you look at both objective data (measurable factors like payroll, prior losses, and exposure) and subjective underwriter assessments (judgment about safety programs and overall risk). The final rating uses the higher of these two indices. This conservative approach ensures the premium reflects potential risk even if one measure is less favorable or misses something that the other captures. For example, if the objective index is 1.20 and the subjective index is 1.35, you use 1.35. If the objective is higher, say 1.50 vs 1.40, you use 1.50. Using a lower or average would risk underpricing; the higher index protects against that.