A rating method in insurance that takes into consideration, for establishing a basis of comparability, the amount of loss experienced by an insured party against the amount of loss experienced by other insured parties with similar characteristics.

Experience rating is a measurement tool for evaluating the insurance risk of an employer based on its experience with workers and staff (and for the purpose of determining compensation premiums, loss prevention, among others). For example, a worker’s compensation premiums are determined based on an experience rating, that takes into account historical claims pertaining to an employee and other factors (e.g., industry classification). Employees with good claim history are expected to be rewarded, while employers can have a measure to prevent potential losses.