Which rating method is used when credible statistics are lacking?

Judgment rating is the appropriate method used when credible statistics are lacking. This approach relies on the insights, experience, and knowledge of underwriters to assess risks and determine premiums. Underwriters may evaluate various factors related to the individual risks, such as the characteristics of the insured, local market conditions, and historical precedents, drawing from their professional judgment rather than solely on quantifiable data. This method is particularly valuable in cases where statistical data is insufficient to produce an accurate and fair rate.

The other methods provide more structured approaches to rating. For example, rule of thumb rating may offer guidelines based on general practices but lacks the flexibility that judgment rating possesses. Experience rating uses past experience data specific to an individual policyholder or group, while manual rating refers to standardized rates developed from more extensive statistical data. Each of these alternatives relies on historical data and trends, making them less applicable when credible statistics are not available.