Identify the correct statement about experience rating in group insurance.
A)It provides a direct economic incentive for risk managers to control claims.
B)The experience of smaller groups is considered sufficiently statistically credible or reliable to determine premiums completely.
C)The smaller the group, the more credit the group receives for its own claims experience.
D)Most small companies have experience-rated premiums in which the group's own claims experience affects the cost of coverage.
E)Final experience-rated premiums exclude administrative charges and fees.

Question

Quizplus · Accepted Answer

Experience rating in group insurance directly ties the cost of insurance premiums to the claims history of the group. This creates a financial incentive for risk managers to implement measures that control claims, as lower claims can result in lower premiums.

Identify the Correct Statement About Experience Rating in Group Insurance