What is the health insurance rating system that groups policyholders by loss characteristics called?

The health insurance rating system that groups policyholders based on their loss characteristics is known as manual rating. Manual rating involves the use of statistical data and historical loss information to categorize groups of policyholders who have similar risk profiles. This method allows insurers to set premiums and design policies that reflect the predicted costs associated with those specific groups.

Manual rating is advantageous because it utilizes a standardized approach to rate setting, making it easier for insurers to create consistent pricing strategies across similar groups. It relies on the principle that similar risks should incur similar costs, which helps maintain the financial stability of the insurance pool and ensures fairness in premium contributions among policyholders.

Other terms in the options provided do not refer to this specific classification method. Calibrated rating might imply an adjustment to rates based on specific factors but does not encapsulate the grouping of policyholders. Objective rating refers to an unbiased method of evaluation but lacks the context of loss characteristics. Durational rating typically involves adjustments based on the duration of coverage or exposure but is not focused on the initial grouping of policyholders by similar loss characteristics.