A producer sells an auto policy to a male homeowner and to his sister, both receiving the same rate. This scenario is an example of what?

The correct answer, unisex rating, refers to the practice of using a single rate for both males and females without differentiating based on gender. In this scenario, the male homeowner and his sister are being charged the same rate for their auto policies, illustrating that the insurer is not applying gender-based pricing. This practice is often used to promote fairness and equality in insurance pricing, ensuring that individuals are not discriminated against based on gender.

Individual rating typically involves determining premium rates based on the unique characteristics of each individual policyholder, such as their driving record, credit score, and other personal factors. Household rating takes into account the collective risk profile of all members of a household, which may lead to varying rates based on the household's combined driving history or insurance claims. Family rating, while similar to household rating, typically emphasizes the familial relationship among the insured instead of the broader household context, potentially introducing additional complexities based on family members' driving records.

In this scenario, since both the male homeowner and his sister received the same premium without regard to their gender, unisex rating is the most accurate characterization of this situation.