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
Transfer of highly individualized loss exposures that is not based on the usual pooling principles of insurance such as risk identification and classification selection. Rather than setting ...
Maximum age of an applicant or insured beyond which an insurance company will not initially underwrite a risk or continue to insure it. For example, under some forms of renewable term life ...
Deferred annuity under which one premium payment is made and the annuity is paid up (no further premium payments are required). ...
Methods by which a home office underwriter chooses applicants that an insurer will accept. The underwriter's job is to spread the costs equitably among members of the group to be insured. ...
Section providing protection in four areas: Coverage A (Home) the structure of the home (basic contract amount). Other property coverages in Section I are expressed as a percentage of ...
Fund in a segregated account to provide for the return of unearned premiums on policies that are canceled. ...
Federal statute defining the federal tax code, covering such topics as credits against tax; business-related credits; computing credit for investment in certain depreciable property; ...
Financial instruments whose principal and income are not established in advance according to contractual terms set forth in the financial instruments document. Both the principal and income ...
Clause in an insurance policy that provides for the payment of a monetary sum to the individual (s) who incurred the loss. ...
Have a question or comment?
We're here to help.