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Prospective Rating

Prospective Rating


Prospective Rating — a method used in arriving at an insurance or reinsurance rate and premium for a policy period based on the loss experience of a prior period. Schedule credits, experience modification, and individual risk rating modifications are factors used in prospective rating, whereas losses incurred during the policy period have no effect on final premium. Guaranteed cost plans, with or without a dividend, are examples of prospectively rated insurance plans.

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