Experience rating

Document description

For this paper it was decided to take as a guideline, not necessarily a definition, that experience rating means, "The modification of a rate-book (we prefer to call it a manual) premium to give some recognition to the observed experience being significantly different from the expected." This guideline still leaves a further sub-division, as to whether the credit or surcharge for experience is to be given at the time of quoting, the premium or as a rebate or extra premium after the risk period has expired and the experience corresponding to the risk period has become known. The latter known in the United States as retrospective rating,or more simply retro-rating we refer to only briefly and leave for further development to another occasion. Thus the study group finally decided to look solely at the problem of modifying the premium to be charged by way of an increase or decrease to the manual premium at the time of quotation.