Experience rating uses relevant past claims experience in an insurance pricing process.
The distinction that matters
The weight given to history, the time period and other rating factors vary by insurer, product and scheme; there is no universal premium formula.
What to check
- Check the experience period.
- Review claim accuracy and outstanding estimates.
- Ask how other rating factors are considered.
Example to discuss
An employer reviewing a premium queries an incorrectly attributed claim rather than assuming the entire increase comes from one incident.
This is a hypothetical comparison, not a customer claim or a determination of cover.
Jurisdiction and scope
Use the definition in the report being analysed. Changes in business mix, reinsurance, estimation and reporting methods can affect interpretation. These measures do not determine whether an individual claim is covered.
Sources and further reading
General information only. The policy, schedule and applicable rules determine the actual position. For a personal decision, use an appropriately qualified adviser or the relevant provider.