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Experience Rating

Definition

As respects workers compensation, the method in which the actual loss experience of the insured is compared to the loss experience that is normally expected by other risks in the insured's rating class. The resulting experience modification factor is then applied to the premium of the insured. In other casualty lines, the actual loss experience of the insured is generally compared to the actual loss experience of risks in the same industry to again develop a modifying factor for application to the insured's premium.

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