Definition - What does Experimental Probability mean?
Experimental probability is a statistical method for determining the frequency of an event by using actual data from experiments. Actuaries use this method to calculate premiums and risks for insurance companies.
It is also known as empirical probability.
Insuranceopedia explains Experimental Probability
Experimental probability is expressed as a ratio of the number of times an event as occurred and the number of experiments performed. The method becomes increasingly accurate the more experiments are conducted, which translates into bigger and more revealing data.
This method helps insurers predict the likelihood of claims being filed so they can make informed decisions about premium rates.