Experience rating
 | It has been suggested that this article be merged with Experience modifier. (Discuss) Proposed since September 2010. |
Experience rating is a method used by insurers to determine pricing of premiums for different groups or individuals based on the group or individual's history of claims. The experience rating approach uses an individual's or group’s historic data as a proxy for future risk, and insurers adjust and set insurance premiums and plans accordingly.[1]
Examples
Unemployment insurance is experience rated in the United States; companies that have more claims resulting from past workers face higher unemployment insurance rates.[2] The logic of this approach is that these are the companies that are more likely to cause someone to be unemployed, so they should pay more into the pool from which unemployment compensation is paid.[3]