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Pitfalls of the Current Experience Rating Plan
Arthur E. Parry and Steven E. Math
The Journal of Risk and Insurance
Vol. 60, No. 4 (Dec., 1993), pp. 658-670
Published by: American Risk and Insurance Association
Stable URL: http://www.jstor.org/stable/253385
Page Count: 13
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Experience rating, a method for adjusting class experience to an individual risk, has certain basic assumptions based on ownership of the firm that do not always apply. We examine situations in which the assumptions do not hold. We then offer recommendations for adjusting the experience rating formula to offset the variations that exist in real-world events.
The Journal of Risk and Insurance © 1993 American Risk and Insurance Association