Experience Rating Factor Calculator

Work out experience rating factor instantly with clear inputs, formula shown and shareable results.

About Experience Rating Factor Calculator

Experience rating rewards better-than-expected claims history. The modifier moves premium part of the way towards the actual-to-expected loss ratio, with credibility controlling how much of the difference is passed through.

Formula

Experience mod

Mod = 1 + Z × (Actual/Expected - 1); Premium = Manual × Mod

Z: Credibility

Worked example

With the default values below, Experience Rating Factor Calculator returns Experience Modification Factor of 1.0800. Change any input above and every figure here is recalculated in your browser.

Inputs used

Manual Premiumminimum 0: 500,000
Actual Lossesminimum 0: 180,000
Expected Lossesminimum 0: 150,000
Credibilityaccepts 0–100 %: 40 %

Results

Experience Modification Factor: 1.0800
Modified Premium: $540,000.00
Premium Change: $40,000.00
Actual To Expected Losses: 120.00%

Step by step

1Values used
2Experience mod
3Experience Modification Factor= 1.0800
4Modified Premium= 540,000.00
5Premium Change= 40,000.00
6Actual To Expected Losses= 120.00

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Can the modifier fall below 1?

Yes. Losses below expected produce a credit modifier and a discount on manual premium.

Why not apply the full loss ratio?

One bad year is largely chance. Credibility damps the swing so pricing tracks genuine risk rather than luck.