In underwriting a new commercial policy, after assessing exposures and determining classification, which step comes next?

• A. Apply rating factors
• B. Verify territory and controls
• C. Quote premium
• D. Underwrite terms

Answer: (A)

The main idea is that pricing a commercial policy starts with turning the classified risk into a dollar amount by applying rating factors. Once exposure details and the appropriate classification are in place, the next step is to apply rating factors to the base rate. These factors adjust the rate for the specific attributes of the risk—territory, payroll or revenue, safety controls, experience modifiers, and other relevant modifiers. The result is the premium that will be quoted to the insured.

In other words, the rating factors translate the risk characteristics into a price. Quoting the premium or finalizing underwriting terms typically follows once the premium is determined, while data like territory and controls inform the rating factors themselves rather than being the separate next step.