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
Law, in several states, establishing a fund to guarantee benefits under policies issued by insurance companies that become insolvent. ...
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Provision in an insurance policy that states the monetary value of each piece of property to be insured. ...
Standard property-liability insurance premium set by a rating bureau for a particular class of risk. ...
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Same as term Mortality Table: chart showing rate of death at each age in terms of number of deaths per thousand. ...
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Actuarial method of crediting retirement benefits earned and the costs associated with these earned retirement benefits. An increment (unit) of benefit is credited for each year of ...
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