This study analyses the appropriate level of fair rate of return for each insurance lines and shows the methodology to determine fair rate of return. In order to estimate fair rate of return for each lines, I employ methodologies used in the financial theory ; target total rate of return, CAPM and discounted cash flow model. Our results can be summarized as follows; First, using the above methodologies, the estimated fair rate of return for each line is not identical and less than 5% of gross premium. Second, constructing the regulation standard and developing the estimation method for the fair rate of return, target total rate of return approach for estimation of fair rate of return is suggested.

Rate Making , Investment Income , Pricing