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
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Funds set aside by an insurance company to pay incurred losses which have not yet been paid. ...
Same as term: engineering approach; human approach ...
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Provision found in a life insurance policy that provides that certain benefits will be paid in the event the insured becomes totally and permanently disabled from an accident incurred or ...
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