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
Insurance coverage that protects a contractor or other type of business providing a service for expenses incurred in the event a contract is not ratified by a foreign government. For ...
Paid loss experience for the period of time from January 1 to December 31 of a specified year (not necessarily the current year). ...
Operator with no liability insurance. If a non-insured driver hits another car, the victim sometimes has no recourse against the driver. For this reason, many motorists carry uninsured ...
Circumstance under which there is a significant deviation of the actual aggregate losses from the expected aggregate losses. For example, a hurricane is a hazard that is catastrophic in ...
Technique of risk management (better known as retention or self insurance) under which an individual or business firm assumes expected losses that are not catastrophic losses through the ...
Type of disability income policy used to provide funds for the ongoing monthly business expenses (such as employee salaries, utility charges, rent, and equipment payment due) necessary to ...
Individual who sells and services insurance policies in either of two classifications: Independent agent represents at least two insurance companies and (at least in theory) services ...
Viewpoint that an insurer whose liability policy is in force at the time of an accident or injury should pay a claim. See also long-tail liability; manifestation/injury theory. ...
Risk management control procedure that emphasizes safety management. Its purpose is to reduce the frequency and severity of potential losses. Business firms apply this procedure by posting ...
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