[[Actuarial Notes Wiki|Wiki]] / [[Exam 5 (CAS)]] / **Experience Rating** ## Definition ==Experience Rating== is a ratemaking technique that adjusts an individual risk's premium based on its own historical loss experience, commonly used for larger risks. ## Formula ``` Experience Mod = (Actual Losses × Credibility + Expected Losses × (1-Credibility)) / Expected Losses Final Premium = Manual Premium × Experience Mod ``` ## Uses - Workers compensation - Large commercial risks - Fleet auto - Individual experience matters ## Related Concepts - [[Credibility#Definition]] - [[Retrospective Rating#Definition]] ## References - Werner & Modlin, Chapter 12