Experience Rating
Statistical procedure used to calculate a premium rate based on the loss experience of an insured group. Applied in group insurance, it is the opposite of manual rates. Here the premiums paid are related to actual claims and expense experience expected for that specific group. In prospective rating, the past three years loss experience of the insured is the basis for the premium calculation for the current year of coverage. In retrospective rating, the current premium rate for the current period of time is modified at the close of that period to reflect actual loss experience. The premium actually paid then can be adjusted, subject to a pre-agreed minimum and maximum rate.
Popular Insurance Terms
worth of each accumulation unit at the end of each valuation period for a variable annuity. This value is similar to that of the net asset value for a mutual fund. ...
In property insurance, a stipulated agreement between the insurance company and the insured that the amount of insurance coverage under the policy is sufficient to be in compliance with the ...
Computer system established by London trade associations for processing insurance policies. The work of LIMNET involves the notification and settlement of insurance policy claims. ...
Record of losses, whether or not insured. This record is used in predicting future losses and in developing premium rates based on expectation of insured losses. ...
Decision in the absence of a plaintiff or defendant at the specified court time. ...
Process of distributing the costs associated with losses and risks over a number of insureds. ...
Property coverage for damage or destruction of structures in the course of construction. For example, the standing frame of a house destroyed by fire would be covered. ...
Insurance company's investment in mortgages that have defaulted (mortgages in default) divided by its adjusted surplus account. The smaller this ratio, the more financially sound the ...
Reserves required by state regulators. Because regulators must assure that an insurance company remains solvent and that it can pay future claims, they set conservative standards for ...
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