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experience account

An experience account is an account into which premiums are deposited, which is established as part of a finite risk insurance program.

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Additional Information

There is no risk sharing with the funds of any other of the insurer's clients in an experience account (i.e., they contain only a single insured's reserve fund that has been established for a specific program). Therefore, balances reflect an individual insured's actual loss experience under a finite program. The account earns investment income, and at the end of the policy term (usually several years), any principal and interest that has not been paid out as losses is returned to the insured.

Related Terms

A payment account is an account established by an insurer under a finite insurance program.