Experience

Published: | Updated: June 1, 2016

Definition - What does Experience mean?

Experience, in the context of insurance, refers to the history or record of loss of an agent, policyholder, or other entity. It can also refer to the statistics calculated using the ratio of losses made by the policyholder to the premium of their insurance policy.

Insuranceopedia explains Experience

An insurance company monitors the experience or the losses experienced by a policyholder to assess the possibility of risks and claims the policyholder will make in the future. Using the experience rating, the insurance company identifies the necessary changes or modifications to the premium to better reflect the level of risk the policyholder represents. If the experience of the policyholder is interpreted to have higher risk compared to other similar policyholders, the insurance company may charge higher premium for this policyholder as a means to ensure claims or losses do not exceed premiums taken in.


How Well Do You Know Your Life Insurance?

The more you know about life insurance, the better prepared you are to find the best coverage for you.

Whether you're just starting to look into life insurance coverage or you've carried a policy for years, there's always something to learn.

Share this: