An insured party's loss amount is rated according to how much loss other insured parties with comparable coverage have experienced.
The most typical association of experience rating is with workers' compensation insurance. It is employed in the experience modification factor calculation.
So, choice B is the right one.
The opposite of community rating is experience rating. It means that when premiums are calculated, the medical history and claims experience of an individual or group is taken into account. Large group plans can still employ experience ratings.
The simple response is that a good rating is one with an experience modification factor of less than 1.00. Any Emod below 1.00 indicates that a business is performing better than average for other businesses in the same industry and state, as 1.00 is average or neutral.
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