[H024]

homogeneous exposure unit

An insurance concept on which the actuarial credibility of insurance rate-making is based. Data and statistics of large numbers of similar or homogeneous exposure units (the persons or properties exposed to insurance losses), with similar characteristics and thus similar exposure to loss, are used to determine the frequency and severity of loss to that exposure group per exposure unit. The homogeneous exposure units are placed into rating categories based on their similar characteristics called classes.